Preamble

The House met at Eleven o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Orders of the Day — NATIONAL INSURANCE (No. 2) BILL

As amended (in the Standing Committee), considered.

11.5 a.m.

Mr. Speaker: Order. I have not selected the Amendments on the Notice Paper in the names of the hon. Members for Abingdon (Mr. Neave) and Worthing (Mr. Higgins). I took great note of the representations they made to me last night. May I say that I have considerable sympathy with the hon. Members, as I know that they are particularly concerned with the problems of National Insurance, and especially this one, on which they have campaigned for several years.
Unfortunately, however sympathetic I may be to the aims expressed, I cannot allow an Amendment to the Bill which brings in additional classes. The scope of the Bill is confined to the rate or amount of contributions and benefit and does not extend to the additional classes of persons entitled to pensions, which is the subject of the new Clause and the Schedule.
The Chair is bound to observe the rules of order and an Amendment is out of order if it is beyond the scope of the Bill. On that ground, these Amendments must now be ruled out of order, as they were in Committee. I have studied the text of the National Insurance Bill of 1967, to which the hon. Gentlemen called my notice last night, and I find that the scope of that Bill was wider than the Bill before the House this morning. I hope that that will convince the two hon. Gentlemen that I have given great care to this question of selection.

Mr. Terence Higgins: On a point of order. May I express our very greatest thanks to you for the very great consideration which you have given to our representations.

Mr. Speaker: I am grateful to the hon. Gentleman. I know how disappointed he and his hon. Friend must be.

Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 55 (Third Reading), and agreed to.

Bill accordingly read the Third time and passed.

Orders of the Day — IRON AND STEEL BILL

Order for Third Reading read.

Motion made, and Question proposed, That the Bill be now read the Third time.

11.7 a.m.

Sir John Eden: We have begun proceedings on the Bill a little earlier than I had anticipated. I have little doubt that the Minister, when he was making his Second Reading speech two months ago, thought that this Measure would glide swiftly and effortlessly on to the Statute Book. It has turned out differently. From the outset we on this side of the House have fully recognised the importance of the Bill and although it was certainly not our aim to prevent it becoming law, we were determined to give its main features close and careful examination.
We are sorry that the Minister did not accept any of our Amendments, it would have made it a much better Bill had he done so. That was not for want of trying on our part. My hon. Friends who served on the Committee did an excellent job; they fulfilled their responsibilities in a thoroughly capable manner and I am most grateful to them. By comparison with the skill and expertise displayed by my hon. Friends the Ministers in charge of the Bill appeared to be strangely ill-equipped. Many of our questions were left unanswered. They appeared either not to know or not to care.
Sometimes to our regret, when argument failed they turned to abuse. We


got the impression that they were irritated that anyone should dare to question their Bill. So irritated were they that on the last morning of all absurdities the Minister found it expedient to move a timetable Motion. He was in a hurry and wanted to get his Bill out of the way. Both the Minister and the Parliamentary Secretary from time to time resorted to the well-worn tactic of implying that our criticisms were against the Corporation. That is not so. We are suspicious of the motives and machinations of this Government. Our criticisms have been directed not against the men and management of the British Steel Corporation, but against the powers under the Bill which the Minister seeks for himself.
Although Ministers came ill-prepared, they were accompanied by a veritable deluge of documentation, all ostensibly in support of the Bill. The only trouble was that not one document seemed to agree with the other. No set of figures seemed to tally with any other. There was enormous confusion over the conflict in the figures which were made available, so much so that the Parliamentary Secretary gallantly tried to come to our rescue by producing yet a further document. Sadly, the confusion still persists. Perhaps before we leave the Bill the Minister will be able to clear up one or two further points so that we know the direction in which the Bill is likely to take the Corporation.
The latest paper, courteousously produced by the Parliamentary Secretary, was designed to shed light and explain discrepancies. It certainly helped a little, but it did not, for example, satisfactorily explain either the mysterious £44 million of unaccounted borrowing, nor the £40 million of loans referred to by the Chief Secretary on Second Reading, nor the £60 million mentioned in paragraph 11 of Cmnd. 3995, the National Loans Fund White Paper, nor does it give a break down of the dividend figures which the Minister produced in his memorandum accompanying the Bill, Cmnd. 4022.
Further, in spite of all our efforts to get at the truth, we still do not know the full extent of the Corporation's long-term borrowing. We do not know whether it will be £157 million as given to me in a

Written Answer on 10th June, or £176 million as appears in the Corporation's publication "Finance for Steel," or £200 million, the figure given by the Minister in Committee.
We still do not know what will be the ratio of internal financing—that is to say, the investments grants and depreciation generated by the Corporation. In Committee, the Parliamentary Secretary made it 50 per cent. "Finance for Steel" shows a ratio more like 75 per cent. Although we ultimately dragged from the Minister the fact that the rate of interest on fixed capital debt is 6·5 per cent., we still do not know the nature of the financial target or the criteria by which the Corporation's performance is to be judged.
You will see from that, Mr. Speaker, that inevitably we have been left in a state of exasperation that as a result of all our probing we do not yet have the true facts of the situation. These are all serious matters, and it is not to be wondered that we are still concerned that the Bill was badly presented from the outset. If the Ministers had taken more trouble, they would have saved a lot of time.
The one thing which is certain about the Bill is that it enables yet another nationalised industry to have a substantial part of its capital debt reduced. Seven hundred million pounds of the liabilities arising out of the Act of nationalisation are to be converted into variable interest capital. One of the reasons given for this exercise by the Government is that the industry operates in an internationally competitive atmosphere. I find this rather strange, particularly when we recall that during the passage of the 1967 Act one of the principal justifications for nationalisation was the Government's claim that there was no competition in the steel industry, so they created a State monopoly. Here they are, two years later, asking Parliament to pass a Bill designed to help them enable their own State industry to take on as many as possible, or as many as convenient, of the trappings of private enterprise.
As a result of our efforts in Committee and on Report, it has been clearly underlined that the concept of public dividend capital will not of itself make the Corporation competitive. There will be no change of ownership as a result


of Clause 2. There will be no true equity. Nor, no matter how anxious the Corporation may be to model itself on the private sector, can it ever be regarded as a normal joint stock company.
I do not blame the Corporation for wanting it otherwise. I do not blame it or its management for wanting to model themselves as much as possible on the private sector. In fact, I strongly approve of their desire to become fully commercial. But sadly, as hon. Members opposite so often reminded us, the Act of nationalisation is passed and steel has fallen victim to Socialist dogma. Having Ministers and their civil servants constantly breathing down the back of their necks must be infuriating and time-consuming for the Corporation's managers. That is one of the penalties of nationalisation, and It underlines the senseless folly of the whole exercise.
One of the more miserable consequences of the Bill is that it marks the demise of the public companies—the grand old names of steel. With their disappearance goes the obligation to keep separate accounting procedures alive. Although the future shape of the industry is still not quite clear, the intention has been spelled out. The result of what has been described as the greatest merger in manufacturing industry is now to be taken further on the road towards a massive unified structure. It therefore seems likely—in fact, it is certain—that in some form or other monopoly product grouping will emerge and will take the place of the old public steel companies.
The Corporation will, I hope, ensure that, whatever the future pattern of the industry may be, the identification of the groups and their accountability is no less clear that would have been the case for public companies. As the Corporation recognise in its reports, many people have a justifiable interest in its affairs. In these days, when full disclosure is very properly required of private sector companies, we have a right to expect even greater openness from a nationalised industry.
The Minister claims that the Bill is necessary to set the Corporation on its way to greater competitiveness and commercial orientation. In defence of his proposals, he has often spoken of the cyclical nature of the industry. Our hope is that the trend will long continue to be upwards. We do not expect all

the problems to be sorted out at once. Doubtless there will still be many difficulties to overcome and many tough battles lie ahead of the industry. But we know that, whatever may be the circumstances in which they find themselves, the men in the industry, with their traditional skill and ingrained enterprise, will spare no effort to make their product competitive in the markets of the world.
Although during the passage of the Bill we have sometimes found it necessary to say harsh things about the Government, let me make it clear beyond any doubt that we all wish nothing but success for British steel.

11.20 a.m.

Mr. Donald Anderson: I rise briefly to bless this useful Bill on its way as one that will provide greater flexibility to the British Steel Corporation by means of a new financial structure and paves the way for product divisions by vesting the total assets of the existing companies in the Corporation itself.
On Second Reading, my right hon. Friend said that the justification for public dividend capital for the B.S.C., as in the case of B.O.A.C., was that it was a viable commercial undertaking and many of us on this side will be looking carefully at the decisions over the next years, hoping that they will be taken against a background of the Corporation being an increasingly viable commercial concern.
Nationalisation is not a dogma, but an opportunity for rationalisation. Hard political decisions need to be taken in the industry. There are all sorts of temptations to yield to regional pressures, as in the case of the Ravenscraig-Llanwern decision in the 1950s. This is a basic industry and we cannot afford to make it a "lame duck". I am confident that my right hon. Friend and the leaders of the industry will have both the urge for efficiency and the quality of humanity which is necessary to ensure that our national steel industry has a rosy future.
I want to refer to the emergence of product divisions and to speak particularly of the position in South Wales, an area which I know best. I have mentioned this point to my right hon. Friend on several occasions. There is some feeling that the regional grouping in South


Wales is too Port Talbot-orientated, where the headquarters of the region is sited. Whatever justification there may be for this, there is some deep feeling among both management and workers involved in the South Wales companies.
Presumably, one of the headquarters of the new product divisions, the sheet division, will be sited in South Wales—there would be an eruption if it were not. I hope that, with this new opportunity, my right hon. Friend will try to ensure that the headquarters is not sited either in Port Talbot, or in Llanwern in my constituency. I suggest somewhere like Cardiff, which is equidistant from these two major centres of sheet production, so that the decisions taken are not only objective and fair but are seen to be so by everyone in the South Wales industry.
I hope that my right hon. Friend will grasp the new opportunity and give this symbolic sign of the objectivity of future investment in the sheet steel sector in South Wales.

11.23 a.m.

Mr. James Scott-Hopkins: The hon. Member for Monmouth (Mr. Anderson) demonstrated why we on this side feel that the nationalisation of steel was a wrong decision.

Mr. Speaker: Order. This is not the nationalisation of steel Bill. We are on the Third Reading of the Iron and Steel Bill. Debate must be on what is in the Bill.

Mr. Scott-Hopkins: The hon. Member was praising the Bill and the reconstruction of the industry, and I was suggesting, Mr. Speaker, that his argument demonstrated why we consider nationalisation of steel to have been wrong.
The hon. Member was pleading for South Wales. He asked the Minister to take a decision and to influence the British Steel Corporation in its investment plans, and this is relevant to Clause 3. His speech underlines our reason for opposing nationalisation. We do not believe that there should be political decisions here. It is not for the Minister to take decisions. They must be taken by the Corporation in the light of the

economic circumstances according to the best management advice.

Mr. Donald Anderson: Will the hon. Gentleman accept that the same argument should have applied to the Ravenscraig-Llanwern decision in the 1950s?

Mr. Scott-Hopkins: Decisions on investment should always be taken on the right commercial grounds. Mistakes are made, but mistakes will happen time and again under the existing set-up. The Bill does nothing to put matters right but makes the situation worse.
My hon. Friend the Member for Bournemouth, West (Sir J. Eden) spoke of our good wishes for the Corporation in future. Throughout the passage of the Bill, suggestions have been made by hon. Members opposite that we were trying to blacken the name of the Corporation and make life difficult for it. That is not so. All through we have been trying, in circumstances we regret, to make the best for the Corporation of a very bad business.
Clause 2 contains one of the most important provisions. Public dividend capital is brought in to the extent of £700 million. The Minister has still not said in what way the decisions are to be taken by him on his directions to the Corporation to pay interest on that capital. The point has been made several times that the proportion between £700 million and the fixed-interest loan capital was something that the Minister wished to maintain, but in Clause 4 he has the power to transfer from reserves to capital under Clause 2 at his own discretion. The proportion between the two can be varied at will. I do not agree that this is the right way of creating an entity of the Corporation.

Mr. Eddie Griffiths: How can the hon. Gentleman reconcile the two statements he is making? On the one hand, he says that the Government or the Corporation are trying to write off £700 million—to lose it in the balance sheet and get rid of it—and, on the other, that the Minister will decide what rate of interest is to be paid on it? How can one pay an interest on something which does not exist? The hon. Gentleman must decide whether this £700 million is being written off or whether it is, as is stated in the Bill, public dividend capital.

Mr. Scott-Hopkins: The Minister has the right, in consultation with the Corporation, to decide whether, in any given year, the Corporation shall pay interest on public dividend capital. If he decides, in the light of what it tells him, that there is no need, the Corporation will pay no interest to the State at all. This state of affairs could arise year after year if the Minister so decided. Whether or not he is advised by the Corporation, under Clauses 2 and 5, the decision is left entirely in his hands.
Therefore, this is another form, if the Minister requires it, of writing off the capital for those years where no interest is paid because of his own decision. If the Minister has decided that this would be fixed interest capital, the Corporation would have had a duty to pay a rate of interest on that capital debt and would have had clear knowledge of how much its liability was.
My hon. Friend talked about the cyclical nature of the industry and how he hoped that the swing is now upwards. We hope that that will continue for many years. If that is so, the Corporation will have no difficulty in paying interest on fixed interest capital. Then it would have known exactly the amount.
However, the whole position was completely bedevilled halfway through our discussions in Committee by the decision of the Government to accept the Prices and Incomes Board Report and to cut back on the amount of the price increase for which the Corporation had asked so as to be able to be in a position to generate enough capital to refinance the renovation of its existing plant and expansion of plant.
It looks now, from the figures which were given to us in Committee by the Parliamentary Secretary—and we are grateful to him for having given them to us, although they came a little late, at least they came—as though the Corporation will have a great struggle to do these things. It looks as though the amount of interest which, under Clause 2, the Minister will be able to authorise on p.c.d., will be remarkably small. I would suggest that, under Clause 3, of the additional £250 million tranche which the Government are allowing to the Corporation to borrow under the borrowing powers there, the first £100 million is

almost taken up at the moment, and because of the cut-back the Government have accepted, because of their commitment to the Prices and Incomes Board Report, the additional amount authorised under Clause 3 will very soon be taken up as well, because the Corporation will not be in a position to generate sufficient self-financing to do the expansion and renovation of its plant which it wants.
Indeed, if it is to follow the lines which the hon. Member for Monmouth was suggesting and is to bow always to political decisions as to investment, then, indeed, it will be in grave trouble, and it will not be very long before the right hon. Gentleman—or, perhaps, somebody else—will be back to the House asking for a further authorisation in a Clause similar to Clause 3 to increase and expand the borrowing powers.
As I said, I wish to be brief, so I shall not dwell at length on the powers to borrow overseas and I certainly do not wish to repeat the arguments we had on that matter, but I think that the Minister gave a glimmer of hope that he agreed about this, that the Corporation will be able to expand its operations in overseas countries. I entirely agree with my hon. Friends that if it is to be allowed, as indeed it is, under these Clauses, to borrow capital overseas that that capital should not be employed back here in this country—for all the reasons already given, the increase in the money supply, the inflationary tendencies, and so on.
All this I entirely accept and agree about. I agree that it should be allowed to do this borrowing overseas on condition that it uses the money in overseas countries.

Mr. Speaker: Order. That Amendment was defeated the night before last, and so is not in the Bill.

Mr. Scott-Hopkins: But as you well know, Mr. Speaker, there is power for the Corporation, with the consent of the Minister and the Treasury, to borrow in overseas markets now. All I am saying now, at this closing stage of the Bill, is that I hope that the Corporation, if it is allowed to so do, as it is allowed to so do, with the consent of the Minister, to do this borrowing, will, having borrowed


money in overseas countries, invest the money in overseas countries.
The Corporation is a worldwide trading organisation and will probably build up its trade and investment near the places where its raw materials are, and I believe that there is a great future for the Corporation in this. Perhaps in days to come the ordinary public will be able to hold a share, a stake—a dominant stake—in B.S.C. In the meantime, I hope that the Minister will encourage B.S.C. to do this and I believe it will have a great future if it so does.
In conclusion, we have had our difficulties over the Bill in Committee, and the right hon. Gentleman and the Parliamentary Secretary were sometimes not fully aware of all the facts. We have always got the facts after we asked for them, but that has sometimes taken a long time to get them, and we have had muddled and long debates because we lacked the facts and figures necessary for clarity of the debate. Now we have come to the last stage of the Bill, but before we pass it and it leaves this House I will only say to the Minister and to the Government that I think they have made a mistake. I think that the Government and B.S.C. will come in future to regret the way in which the Bill has been drafted and the capital has been divided, and the percentage of public dividend capital instead of fixed-interest capital. They will regret that the names of the old companies in the industry are being abolished, but I join my hon. Friend the Member for Bournemouth, West in wishing B.S.C. the best of good fortune in future, operating, as it will be, under the gravest of political difficulties.

11.35 a.m.

Mr. Nicholas Ridley: I said on Second Reading that this was a sloppy Bill sloppily presented. I believe I was wrong. It is an extremely sloppy Bill extremely sloppily presented.
The Joint Parliamentary Secretary to the Ministry of Agriculture, who is now leaving the Chamber, has been here to see how best to obtain £700 million cheap capital, which he could well do with to put into agriculture, and I am not sure that it might not be a more profitable investment were we to put the money into

that great, prosperous, hardworking industry. I say this because I think it goes to the root cause of what is wrong with this Bill. It is a question of allocating resources.
I believe the reason for the British economic crisis is the layer upon layer of sloppy, bad Bills of this sort which have been placed on the Statute Book, with endless political decisions being taken about the allocation of national resources, and it is in that context that I want to make one final criticism of what is proposed in the Bill.
The Minister seems to assume that the manufacture of steel on an ever-increasing scale is a divine right of this country and something which is as important as Westminster Abbey and will last as long. If he had thought the same thing about the manufacture of hansom cabs in the 18th century we would, presumably, still have an industry for the manufacture of hansom cabs. I do not know; I do not pretend to have the slightest idea whether in fifty years' time the steel industry will be or should be greater or smaller than it is at the present time. It might cease to exist because new products will have been invented. It may be that steel will be made in Australia or at Dunkirk or some other place where conditions will be more favourable.
The point I want to make is that we must, in the public ownership of these industries, have a system whereby decisions of this sort can be taken correctly, and that is why, like my hon. Friends, I have argued that the decisions must be left to the industry and not taken away from it, for they are commercial decisions, and contrary to what the hon. Member for Monmouth (Mr. Anderson) was suggesting, that it is a good idea for some reason that the Corporation should have its offices in Cardiff—for political purposes rather than the consideration that the correct commercial decision should be taken.

Mr. Anderson: Not political. I said psychological purposes for the good of the South Wales industry—not for political purposes.

Mr. Ridley: The hon. Member must learn to find out the rate of return on capital investment in psychological reasons. That is the point, and what we


want to have is a Steel Corporation taking its decisions as commercial decisions and not just ones which we as politicians think are good ones.

Mr. Anderson: Profits?

Mr. Ridley: The use of public dividend capital is likely to be a step in the wrong direction because the reason why we should invest money and therefore be able to pay dividends on the investment in steel is not that it is a good idea to have a steel industry or because it saves imports, or anything like that, but that it is a profitable thing to do. Therefore, to give the British Steel Corporation a type of capital which enables it to shirk the profitability aspects of what it is doing is a mistake.
I know that the B.S.C. is subject to the 8 per cent. discounted cash flow test on all new investments, but what I cannot understand is why this same test should not apply to the investment of new public dividend capital rather than just to the making of investments in general. Supposing the percentage of 8 per cent. were the correct rate, which patently it is not, then we should be told in advance that the Steel Corporation should not make investments, even in the medium of p.d.c., unless they can yield the 8 per cent. It is fatuous to give the B.S.C. capital and not to say in advance what return must be made upon it and to say, "After you have had the experience of employing the capital, we will jointly decide how much you should pay."
When one adds to that the farce which we uncovered in Committee that corporation tax is to form part of the declared rate of interest, one realises how very far we have come from proper economic decisions about the allocation of scarce national resources.
There is a capital famine; capital is costing up to 11 per cent. in the markets; yet here are we solemnly going through the paraphernalia of passing this Bill through the House to provide £700 million of scrace capital to make investments for political reasons, without having the faintest idea whether we shall get any return or whether this has been a proper investment. It is not a question of dogma about whether we favour private or public investment, or of whether we knock one system or another, or of patriotism; and all those ridiculous

features of the Parliamentary Secretary's about how we were trying to "do in" British steel were off the point. The point is whether this country should or should not make certain investments, either through the public or the private sector.
Where nationalisation has so far failed the nation, and failed it at tremendous cost, is in not having devised a means of deciding what is the proper allocation of capital within our national investment structure. Those of us who fought the original Steel Bill predicted that this would be so. We have little thought that, after such a desperately short time, we should be proved right, and that this sorry, miserable, wretched Bill, which will only contribute to the British financial crisis, would be necessary.

11.42 a.m.

Mr. Patrick McNair-Wilson: The Bill is an unsatisfactory Bill. On Second Reading I described it as damaging, dangerous and deceitful. After having followed the Bill for some weeks, my views are totally unchanged. Indeed, it is fair to say that the Bill poses more questions than it answers, and here we are, at Third Reading, none the wiser, after having been through a very long Committee stage.
One reason for this has been the total intransigence of the Minister and his Parliamentary Secretary throughout all the debates. They have been sticking to a very tightly worded brief which has been handed to them. They have both made it clear beyond doubt that they are neither of them steel men, and so through all our debates they have never been fully aware of the problems of the industry and have been unable to answer the questions put to them by hon. Members from this side.
The Bill will become law carrying with it some very dangerous proposals. First, it gives the corporation the widest possible borrowing powers. It is frightening to realise that in 1967 the corporation set off with a borrowing limit of £300 million: last year that limit increased to £400 million, and, after the passing of the Bill, there will be a possible limit of £650 million—and this in a very short period of nationalisation.
What worries me is that we are passing this borrowing power with no evidence how the money is to be spent. Those


of us who follow the steel industry, and perhaps have been in it, will realise that it is just possible—I hope not—that the top of one of the many cycles which the industry goes through has been reached, and perhaps even passed, and some of us may have noticed yesterday that steel production is beginning to tail off. I hope that this is only marginal, but it must be considered, and the Minister must satisfy himself, and indeed the country, that £650 million worth of taxpayers' money will be needed at a time when the market situation for steel—

Mr. Eddie Griffiths: The hon. Gentle-month has said that steel production is tailing off, but this is misleading the House. The fact is that the boom which has been going on since September is continuing for much longer than the so-called experts of the other side anticipated.

Mr. McNair Wilson: I take the hon. Gentleman's point. We know how misleading facts and figures concerning steel production can be, but on the figures as they are known—and he no doubt read the figures yesterday with the same despondency as I did—the hon. Gentleman must have noticed that the graph is beginning to fall. In this situation, should we be advancing an opportunity to borrow enormous sums of money?
At no time during our discussions has an investment programme for the industry been produced, no targets have been produced and we have no evidence why this money is required. It would be fair to say that by giving the Bill a Third Reading we are passing a blank cheque to the Minister and the Corporation to do as they wish without identifying the areas where the money is to be used.
I am also concerned about foreign borrowing. The indebtedness of this country is no secret. The Minister was quick to brush this aside in Committee, but I am concerned that it would be possible to take up all the borrowing powers in foreign currency. I know that the Minister described this as completely hypothetical and not worth consideration, but I do not think that we should let it go at that. I should have liked to see in the Bill a check on the level of borrowing in foreign currency. After all, this country has short-term repayment obligations of about £4,117 million, which must be

paid back at the latest by 1976. That is a very great deal of money, and for a nationalised industry to be able to wander round the European money market adding to the total indebtedness of Britain is an extremely dangerous exercise. To have no check on the level of these borrowings is folly in the extreme. I cannot understand why it is not possible to have an arrangement whereby when these borrowings take place the Minister has to come to the House and explain why the money is required.

Mr. Speaker: Order. The hon. Member must not stray in that direction on Third Reading.

Mr. McNair-Wilson: I take the point Mr. Speaker.
I turn now to the controversial area of the Bill which centres around Clause 8. Clause 8 seeks to break up the company structure. This has been discussed at length in Committee, and we know that this will affect good will, morale, exports and so on. I want to say something which is more important and which I hope will be helpful to the Minister. The disappearance of the company structure is part of the move from geographical areas to product groups. It may be that in the manufacture of steel the product groups will be more effective, but the mere production of steel in itself is not enough.
There are those who are very concerned that when the divisions have been split up into product groups other areas of industry may want to buy sheet from one area, structure steel from another area, and universal beams from another and they are worried that there will be no co-ordination. I hope that when the Minister has set up the product groups he will make sure that there is proper marketing co-ordination between the groups. We do not want production groups frantically producing individual products with no proper idea of marketing.
One has experience in the corporation at present of a great lack of understanding at the right levels of marketing procedures. I do not blame them for this since they are confused by the many changes which they have had to face. I warn the Minister that several industries are now looking at materials other than steel. If the marketing of these products


is not right, the other industries will turn away to those other products.
Clause 8 raises even more important considerations. It contains the genesis of the whole Bill—the raw meat of political philosophy. I should like to quote what the Minister said on the Clause on 1st July, since he put it so well. When referring to myself—he has always been most courteous and generous in his remarks to me—he said
The hon. Member for New Forest is right to believe that when the Bill has gone through Committee, it will be much more difficult for steel to be denationalised. It will be more difficult for steel to be unravelled.
Then he went on to say:
It is wrong that hon. Members opposite, for narrow, mean, doctrinaire political reasons should keep slanging the name of British steel …" Here we have typical Tory reasoning: resistance to change; hesitant to see a major national industry go forward.—[OFFICIAL REPORT, Standing Committee A, 1st July, 1969, c. 426.]
Heady stuff, not a dry eye in the House! The Minister is at his best on such an occasion, and I shall return to what he said in a moment.

Mr. John Ellis: The hon. Gentleman is not doing too bad either.

Mr. McNair-Wilson: I am grateful to the hon. Gentleman. The Minister was wrong. It is not our intention at any time in these discussions to be hesitant or resist change. But also we do not wish to be foolhardy, and we are unconvinced, cautious and concerned. We are anxious that in this great industry, which has not long been in Government hands, the right steps should be taken to make it effective and viable.
The Minister in these debates has shown himself to be an admirable politician. It is in those political moments that he shines brightest. But he is not a steel man and he is not, I am sure he will admit, a businessman. My cricisim of the Bill is that we are passing into law legislation to give the Minister even greater control over the industry. We shall be cutting right across the very thing that the Minister and the Chairman of the B.S.C. constantly tell us they are seeking to do, and that is to make the industry commercial.
We saw from the N.B.P.I. Report on the prices of steel just how political com

mitments can get in the way of commercial judgment. No Minister will starve a nationalised industry of money regardless of performance. Therefore, all the commercial parameters that one tries to set up are meaningless.
The hon. Member for Newport (Mr. Roy Hughes), who has now left, pointed out that hard political decisions would have to be taken. These are decisions that I do not want to see taken. I want to see hard, commercial decisions taken rather than political ones. The fact that we have nationalised the industry is not in itself going to make it more effective. We must produce effectively and sell competitively. I am much more anxious to see the industry running on commercial lines than on lines which are suitable to and appreciated by hon. Gentlemen opposite.
I want to see the industry once again given an opportunity to be commercial. I want to see the industry once again taken out of the maw of Socialist politicians and run once again by people who understand steel. Politicians are excellent people in the right place. The wrong place for them is masquerading as tycoons and captains of British industry.
I congratulate my hon. Friend the Member for Bournemouth, West (Sir J. Eden) on his magnificent speech, and I echo his words. I believe in British steel with a small "s". I do not believe in the British Steel Corporation.

11.57 a.m.

Mr. David Lane: I take part in this debate with great good will towards the industry but with grave fears about the effects of nationalisation. I wish to comment on three provisions in the Bill.
Clause 3 makes this large increase in borrowing powers while we are still uncertain what these millions of pounds will be used for. I know that the development programme is now before the Minister and raises crucial and exceedingly difficult issues, but we have a right to demand of the Corporation and of the Government that these issues should be settled soon.
It is nearly two years since the industry was nationalised. During this time there have been too many leaks and rumours and too few hard decisions. Only this week the latest rumour is about a new


port development on Teesside to serve the industry. I believe this would be a correct priority if the rumour is true, but we should like to know the situation as soon as possible so that we can all see where we stand.
I believe that the corporation and the Government will be right to develop two or three major ports of this type for use by the steel industry and other industries. They will be right to concentrate future expansion at a relatively few centres of steel-making with natural advantages. If they do this they will continue a trend which started many years ago under private enterprise. Whichever way the decisions go, let us have bold and rapid decisions to end the uncertainty and let people inside and outside the industry know where they stand.
Turning to Clause 5, I welcome the more specific financial duty which on the face of it is laid upon the corporation. It is unsatisfactory, however, that we are parting with the Bill today having been given no idea what target is to be set. I make no apology for returning to this matter today although we spent a good deal of time on it in Committee and on Report. If we are to believe in the intentions of the Government to impose a strict discipline on the corporation, it is imperative that this target should be set and published soon. If this is not possible for the Government before the House rises, surely they should do so and let us know what it is before the end of the Corporation's financial year in September.
Thirdly, Clause 8 paves the way for the disappearance of the publicly- owned companies. We have had nothing but blind prejudice and contemptuous sneers from hon. and right hon. Gentle- men opposite when they have referred to private enterprise. The record should be put straight now by paying tribute to the achievements and vision of those who have worked in these and other companies before, during and since the war. These are companies such as Richard Thomas and Baldwins, the Steel Company of Wales, Stewarts and Lloyds, John Summers, United Steels, Guest Keen, Dorman Long, South Durham, Consett and Colvilles. I pay tribute also to the men and women, who

were formerly my colleagues, in the central organisations of the industry.
With the disappearance of these companies, the powers of the Corporation will be increased still further. Fears are being felt that, out of all the haze of uncertainty, the Corporation is emerging as an insensitive and over-centralised colossus. Let me give three examples of this disturbing trend. Only this week a leading executive member of the National Union of Blast Furnacemen said:
We feel that the British Steel Corporation is so busy planning its own future that it has little concern for ours.
Secondly, there have been disturbing reports, as the trend towards centralisation has developed, of lower morale among the men on the job, doing the work of planning, making and selling steel. There have been reports that their scope in decision-making is being restricted by the increasing power going to the centre. There are reports of experienced salesmen leaving for other industries. This point was raised in Committee, but there was no comment from the Government.
Perhaps most important is the attitude of the corporation towards steel consumers, unfortunately exemplified by a current advertisement which appeared in the newspapers only yesterday—"Steel can and others can't." It is astonishing that that advertisement was apparently prepared and produced without any consultation with the main user of tinplate and producer of cans, who protested a few days ago that the advertisement should appear at a time when the supply of tin plate is substantially below demand. My hon. Friend the Member for New Forest (Mr. Patrick McNair-Wilson) has referred to the attitude and fears of consumers.

Mr. Ridley: I have not yet seen the advertisement, but is my hon. Friend sure that it does not say "Steel can get p.d.c., and others can't."?

Mr. Lane: I am sure that that will be the new version of the advertisement, if it has to be withdrawn for good reasons. If that episode, possibly small, is typical of the attitude towards consumers, then they have every right to be disturbed.
While we welcome recent production records we cannot shut our eyes to these


current examples of disturbing trends in the industry. Unless the corporation shows itself more aware of the feelings and needs of those outside itself, the future for many working in the industry and for those who depend on it will be one of disappointment and frustration. I hope that the industry will flourish. I am sure that it will flourish better under a régime which gives greater choice to consumers, in which there will be less burden on the taxpayer and more discipline upon the industry through the re-injection of private capital.

12.5 p.m.

Mr. David Crouch: The right hon. Gentleman the Minister and the hon. Gentleman the Parliamentary Secretary are particularly lucky to have had so much good advice from this side of the House—I cannot recall a Friday morning when a Minister has been so privileged to have had such a wealth of advice from hon. Members representing such interesting places as Bournemouth, the New Forest, Cambridge, Cirencester and Tewkesbury, and he might even get some advice from Canterbury. I hope that the Minister will take note of the serious tenor of the advice that he has been receiving, expressed so forcibly by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley).
It has been given to him sincerely, in the hope that he will realise that, as the sponsoring Minister for an enormous new nationalised industry, he has not a political responsibility but a responsibility to safeguard a national investment of taxpayers' money. I am talking about the commercial disciplines and I hope that the Minister will remember that we cannot consider this industry without bearing such disciplines in mind.
The main purpose of the Bill is to bring about the restructuring of the Corporation's finances. The Minister is asking us to accept an increased borrowing of £250 million and the use of £700 million, possibly without the payment of interest. These facts must be said slowly so that they penetrate outside this House, so that the full meaning is realised and it is appreciated how big an operation this is and how much money is involved. I join with all those who have wished the Corporation well. Its success will influence very much other parts of British industry.
I strongly agree with the views expressed by my hon. Friends that it is essential on all sides of our industry, and particularly in the nationalised industry sector, that these same commercial disciplines should apply. The hon. Member for Monmouth (Mr. Anderson) spoke about the psychological effect on management and workers of siting headquarters in a particular part of the country. The most important psychological effect on a nationalised industry has to do with whether it will be subject to the full commercial disciplines and so make the right commercial decisions.
The psychological influences which might come from this restructuring of the Corporation's finances could make the Corporation's management feel that these commercial disciplines were no longer as strict as they should be. The Minister must remember that he is only the sponsoring Minister and it is his Chairman, beneath him, who should be required to react to these disciplines. I was among those who served for a year on the Committee which eventually produced a report on the responsibility of the nationalised industries to the Government, to their Ministers. This report said that the nationalised industries, if they are to serve the Minister, must become more commercially orientated and less politically orientated.
Only yesterday, I heard that British Railways were now running at a slight profit. How? It is because the Government have picked up the tab, the cost of the social obligations. I do not object to that. In the Steel Corporation the Government must not "pick up the tab" and allow the Corporation to operate for as long as it may like without paying interest on capital, and able to come back for more taxpayers' money.
I hope that the Minister will at least acknowledge that he has a heavy responsibility and will realise that this side of the House and the whole nation will be watching the opportunity which he can give to the industry to operate successfully in a commercial manner.

12.10 p.m.

Mr. Eddie Griffiths: It is always a privilege to make a contribution in a debate on the steel industry. Like hon. Gentlemen opposite and my hon. Friends, I welcome the Bill.
I am quite sure that the hearts of steel men in Sheffield, Scotland and on the North-East Coast will be gladdened when they read of the concern for their welfare and future which has been expressed by the hon. Members for Bournemouth, West (Sir J. Eden), New Forest (Mr. Patrick McNair-Wilson), Cirencester and Tewkesbury (Mr. Ridley) and Canterbury (Mr. Crouch).

Mr. Patrick McNair-Wilson: Reference was particularly made to the New Forest. I hope that they will be concerned, because in the New Forest we have a very large industrial steel-using area, particularly in the construction of the Fawley power station. The Minister will know of the delays that we have had in the supply of structural steel to that power station.

Mr. Griffiths: Obviously, the steel men will be gladdened to know that they have been judged and that their future has been predicted from the consumers' point of view. I do not like the word "consumer". In the steel industry it has always been "customer". I hope that my right hon. Friend will take this to heart and that the B.S.C., in its future activities, will not think of its customers as consumers, but will give them the same sort of efficient treatment that they have had in the past.
The steel industry has a very proud record. The 250,000 workpeople in the industry do not want charity. Hon. Gentlemen opposite have talked about £700 million being wiped out. I hope that my right hon. Friend will see the Steel Corporation gives an adequate return on its capital debt. As Lord Melchett has said on many occasions—and, indeed, if the Report of the National Board for Prices and Incomes had been rejected and price increases had been allowed—with the buoyancy in the industry at the moment an amount of about IS per cent. could have been put on the industry, as it has in the past in some works.
I hope that my right hon. Friend will see that the B.S.C. is made into a strong, viable, commercial enterprise. The industry does not want Government charity. We hope that the future will have as little political interference as possible either on a parochial or on a regional

basis. The industry should be allowed to get on with the job of making good quality steel and of giving good delivery dates so that it can be profitable.
I turn now to the disappearance of company names and, indeed, individual companies. The hon. Member for the New Forest, in quoting my right hon. Friend, has assured himself of one thing today. If he ever has the misfortune to lose his seat, I am certain that he will have a future on the stage. I do not think that it will be on the furnace stage, but, nevertheless, on the stage.
The company names may go, but quite a number of the people associated with the industry over the last 30 or 40 years are working in the B.S.C. Hon. Gentlemen opposite have said that the industry has given good service in the past. These people, who are now under the mantel of the Steel Corporation, will surely give the same sort of service that they gave to the individual companies.
I do not believe that in commerce, in business, or in industry, there is quite the sentiment painted by hon. Gentlemen opposite. Indeed, what the customer wants is good-quality steel delivered on time at the right price. Whether it comes from Stewarts & Lloyds, the English Steel Corporation, Steel Peech and Tozers, or Port Talbot does not interest them.
There is, unfortunately, a strike of blast furnacemen at Port Talbot which is curtailing substantially the production at that plant. I am sure that its customers will be looking elsewhere within the B.S.C. and, if their requirements cannot be met, they will probably go abroad. There is no real loyalty between customer and producer. The customer wants the goods delivered. Experience in the steel industry is that when a plant has lost orders to another competing plant, often the customers realise that the product is as good, or sometimes better, and they remain with the new producer. Therefore, we should not mourn too much the disappearance of the company names.
Hon. Gentlemen opposite have spoken about the low morale in some places in the industry. That is a measure of the uncertainty that prevails in the industry. If we could remove the uncertainty I am sure that the morale of the workers at all


levels in the industry would rise overnight. It is uncertainty about the future and the attitude of political parties about long-term planning which is causing the uncertainty.
Reference was made to the ore terminal and whether it should go to Teesside, to Immingham, or to the Clyde. This is the kind of uncertainty, as well as the political uncertainty, that is jeopardising the morale of the industry.
I should like to turn to the question of the regions. In the Bill and the documents that we have had mention is specifically made of Wales and Scotland. It is time that the word went out that the steel industry of this country is nationalised. We are talking about the Steel Corporation, and the interests of Scotland, the North-East Coast and Wales are secondary to the national interest and the nationalised steel industry.
It is clearly stated that there will be regional concern. How are the regional interests to be safeguarded? It is said that there might be a director on the board of the British Steel Corporation to look after the specific interests of Wales and Scotland. In my opinion, it is not necessary, but if my right hon. Friend, in his wisdom, deems that it is, I submit—and I am sure that hon. Members on both sides of the House will agree with me—that there must be a member on the Board to look after English interests. I hope that my right hon. Friend will take that point into account.
I welcome the Bill. I look forward to a bright future for the Corporation, which reaches its second birthday at the end of this month. I wish every success to the Corporation and its Chairman, Lord Melchett—who has the greatest respect not only of the House but of the 250,000 people who work in the industry. The production figures for the first six months of this year are nearly a record, so that the future augurs well for the Corporation.
I hope that in the future there will be as little industrial unheaval as there has been in the past, and that when we discuss the next Steel Bill the Minister will be able to report—contrary to the expectation and hopes of hon. Members opposite—that the Corporation is paying its way and is giving the nation the sort

of return that I am more than optimistic it will be able to do.

12.22 p.m.

The Minister of Power (Mr. Roy Mason): When my predecessor as Minister of Power—now the Minister of Transport—moved the Third Reading of the last Iron and Steel Bill in 1967 he remarked that it had received one of the most prolonged and thorough examinations ever to be given to a Bill in the House of Commons.
Discussion of the Bill has not been on anything like the same scale, but given the length of the Bill it has been full and searching. It was absolutely right to have a full and searching examination of a Bill which changed the capital structure of a major nationalised industry and increased its borrowing powers by £250 million.
I do not measure the usefulness of the debates that we had by the fact that no Amendments were made. As the hon. Member for Bournemouth, West (Sir J. Eden) said at the end of the Committee proceedings, the Bill has been given a very careful examination. It was a careful and a useful examination.
The Opposition had a good team. It was well led. They had well-chosen Members, who played a remarkedly good part throughout the Committee proceedings. There were one or two mavericks, like the hon. Member for New Forest (Mr. Patrick McNair Wilson). He is against the Bill. He is against nationalisation. He would like to denationalise steel. I take it that that is not the view of the official Opposition any longer. After the Bill is passed they have no intention once more to throw back into the political game of pitch and toss this coin that they have played with for so long—the Corporation.

Mr. Anderson: Since much mention has been made of morale in the industry being affected by uncertainty, would it not be helpful, and for the benefit of all concerned in the industry, for the Opposition to state clearly their views on the future of the industry?

Mr. Mason: One of the more serious features that has formed a theme in our discussions on the Bill is the fact that many people in the industry are concerned and anxious about their future.


To some extent that anxiety hinges on the question whether the Opposition, if they were ever returned to power, would ever denationalise steel.
The hon. Member for Bournemouth, West and his hon. Friends could take this opportunity, if they so wished, to explain to all those working in the Corporation that from this day hence they need have no further anxieties because the Corporation is for ever settled and the Opposition have no intention of ever denationalising it if they come to power.
I would have hoped that the official Opposition spokesman concerned with the steel industry would now say that, and so clear the minds of all those in the industry once and for all. I take it that silence means acquiescence.

Sir J. Eden: The right hon. Gentleman has no right to take anything or to interpret anything from my silence.

Mr. Mason: That is a pity. I gave the hon. Member and his hon. Friends the opportunity. No doubt all those who work for the Corporation—from the members of the board down to those working in the plants—will now be fully aware of the fact that if the Opposition were ever returned to office denationalisation would be a possibility. That will not allay their concern.

Mr. Speaker: Order. We must now get back to the Third Reading debate.

Mr. Ridley: My hon. Friend was quite right not to respond in any way. If he were to say that we would not denationalise the industry there would be such a catastrophic fall in the morale in the industry that production would come to a total halt.

Mr. Mason: I thought the reason for the hon. Member's silence on the issue was to give heart to some of the political mavericks in the Tory Party, like the hon. Member for New Forest.

Mr. Speaker: Order. We must leave this question until we have a debate on a Motion on the future policy of the Conservative Party.

Mr. Mason: The question is best left for the Conservative Party Conference, as you suggest, Mr. Speaker.
I want, first, to make a general point. Many of the Amendments proposed were directed towards the publication of fuller information by the Corporation. We discussed this on Wednesday night. Although the Amendments in themselves were unacceptable I hope that the House will agree that my hon. Friend and I, by the undertakings that we have given, have gone a long way towards meeting the need expressed.
I am in complete sympathy with the view expressed by the hon. Member for Morecambe and Lonsdale (Mr. Hall-Davis) late on Wednesday night, that public corporations, and bodies in the public sector, should set the pace in conforming not only to the letter of the Companies Act but to its spirit. I also sympathise with the hon. Member for Bournemouth, West and the hon. Member for Cambridge (Mr. Lane), who welcomed the fact that year by year our national economy is becoming more open, but stressed that most of us want still more disclosure in both the private and the public sectors.
The nationalised industries have traditionally led the rest of industry in the publication of information in their accounts. The tide in private industry is now moving strongly towards the publication of fuller information, and the 1967 Companies Act represented a major step forward. I expect the accounts of the nationalised industries, including the B.S.C., to continue to lead and set an example to private industry.
On the question of p.d.c., let me once again make it clear that it is not intended as a disguised form of capital write-off, or as an easy way out from the hard facts of life. My hon. Friend the Member for Sheffield, Brightside (Mr. Eddie Griffiths) was right to say, in other language, that p.d.c. is not intended to be a couch on which lethargic members of the board and the industry can rest. What I intend—and this must be a broad statement of intention which is not to prejudge the decision on dividends in any one year—and intend firmly, is that what the Government receive from the Corporation once it has p.d.c. shall not be less than what it would have received had there been no p.d.c.; in other words, the dividends on p.d.c. plus the corporation tax which comes to the Government as a result of this change


will be no less than the interest which would have been paid on fixed interest capital.
This change will be an important improvement, and is well worth the experiment. It will enable the Corporation to face the real problem of the future wth a sound financial structure which makes it comparable with its competitors.
The hon. Member for Bournemouth, West and the hon. Member for Cambridge mentioned the financial objective. Clause 5 empowers me to set a statutory financial duty for the Corporation in more specific terms than is contained in Section 16(1) of the 1967 Act. This duty or objective will be expressed, like the one given to B.O.A.C., in terms of a rate of return on the Corporation's net assets over a given period of years. It will be determined after consultation with the Corporation and in agreement with the Treasury.
There were various suggestions for changing the form of the objective which my hon. Friend the Parliamentary Secretary dealt with fully in Committee, but I will take this opportunity of reiterating that the Corporation's financial duty will be determined in accordance with the Government's policy as stated in the 1967 White Paper reviewing the economic and financial objectives of nationalised industries, Cmnd. 3437, that the objective will be looked upon to a large extent as the minimum that the Corporation should aim to achieve and so will in no way be restrictive and, by having a life span of a number of years, will allow the Corporation's performance to be judged in proper perspective so that the lean years and the good years can be taken together.
It is my intention to fix a financial objective for the Corporation as soon as possible after enactment of the Bill and to ensure as far as possible that the Corporation has a statutory objective during the whole time it has p.d.c. The objective is intended to be a reasonably stiff incentive which the Corporation must gear itself over a period to achieving, taking one year with another.
The hon. Members for Bournemouth, West and New Forest and my hon. Friend the Member for Sheffield, Brightside raised the question of the structure of the Corporation, and particularly Clause 8.

There was considerable discussion in Committee about Clause 8. There is one general comment I should like to make on the Clause. It will have no real effect on the industry's operations or policy. It will not affect its production policy, selling policy or labour relations. The companies have already ceased to play any real part in the management of the industry, so that their disappearance will not affect these matters. I see the dissolution of the companies as having two effects only. First, it will bring appearance more into line with reality, by giving the Corporation direct ownership of the industry's assets as well as the effective control of the industry's operations. Second, it will free it from the costly and time-consuming administration involved in maintaining the companies.
My hon. Friend the Member for Monmouth (Mr. Anderson) mentioned organisation. During the Committee debates, some concern was expressed about the Corporation's organisation and especially the effect on consumers of a possible change to a system of product divisions. This question of organisation is not, of course, directly related to Clause 8. The case for the abolition of the companies would be just as strong if the present groups continued as it would be if the Corporation moved over to product divisions.
But, apart from this, no decision has yet been made on these matters of organisation. A change to a system of product divisions would require my consent. I have not yet received the Corporation's final proposals, although both it and I are, of course, anxious that these questions should be resolved as quickly as possible, and the Corporation hopes to publish a third report on organisation, giving its final proposals, before the end of the year. But I have taken note of the points made in Committee and in the debate.
Some concern was also expressed about the position of consumers under any new arrangements, particularly by the hon. Member for Cambridge. I can certainly assure the House that this is one of the aspects I shall have in mind when I reach my decision. But, while I certainly share hon. Members' desire that the interests of consumers should be properly safeguarded, I do not think that


there is any need for concern on that score now. I have received no representations from the Consumer's Council on these matters of organisation. In this respect and, indeed, generally, I know that the Corporation is well aware of the importance of consumers' interests. Indeed, it must be as a simple matter of commercial prudence. Although it has no statutory obligation to consult the Consumers' Council, it has said that it would always be pleased, as soon as it has decided broadly on its own lines of approach, always to take the Council into its confidence on important matters affecting consumers. These matters naturally include changes in the marketing and sales structure where these would have important effects on consumers.
When the 1967 Act was drafted, we had—and we said this at the time—to work very largely in the dark because the Corporation was not in existence, and we had little idea of what organisation it would propose, how it would plan the industry and what investment it would wish to undertake. Now nearly two years have passed since the vesting date, and the picture is becoming much clearer. Major decisions regarding the expansion of the industry are now on their way. Today, for example, as I forecast in Committee on 19th June, the Corporation is announcing its proposals to develop steel-making facilities at Scunthorpe and an ore terminal at Redcar, on Tees-side. I hope that that will satisfy the hon. Member for Cambridge and answer the questions posed by my hon. Friend the Member for Brightside.
It is not possible to allay all the anxieties and concern of those in the steel industry in Lackenby, Port Talbot, Llanwern, Ravenscraig and Scunthorpe altogether. The picture is evolving, and the first announcement is being made. I want to emphasise that the proposals being announced today require my approval, because they form part of the capital investment programme, and it has still to be examined by the Government. In addition, the ore terminal requires the consent of my right hon. Friend the Minister of Transport under the Harbours Act, 1964. All the relevant considerations will be taken into account, including regional ones, but this is only the

first of a series of major development proposals which will emerge in the months ahead.
The possible development of an ore terminal on the Clyde, which was raised by my hon. Friend the Member for Brightside, is not affected by the proposals. The Corporation recognises that the deep water approaches of the Clyde make it especially suitable for large ore carriers.
The Bill will enable the Corporation to get on with the heavy tasks ahead from a sound and stable base. I hope that as soon as it has gone through its remaining stages the House will realise that so much water has flowed under the bridge that it is not now possible to turn back, that nationalisation of steel is a fact and that denationalisation again would be hideous. I hope that the House will accept the Motion.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Orders of the Day — NORTHERN PENNINES RURAL DEVELOPMENT BOARD

12.38 p.m.

The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. John Mackie): I beg to move,
That the Northern Pennines Rural Development Board Order 1969, a draft of which was laid before this House on 1st July, be approved.
Hon. Members will recall that during the passage of Part III of the Agriculture Act, 1967, there was general agreement with the Government's proposals to set up a new kind of executive body to tackle the problems of those areas of hills and uplands faced with special difficulties.
These bodies—rural development boards—are to have the powers and functions set out in Sections 45 to 55 of the Act. Generally, they will be established to give encouragement and assistance to farmers and landowners in overcoming the special problems of farm size and the use of land in the hills and uplands. They will be particularly concerned with the co-ordination of agriculture and forestry in their areas. They will also have powers to grant-aid the improvement of rural services and help people


engaged in agriculture or forestry who want to supplement their income by catering for tourists.
Since the Act came into force we have been taking the necessary steps for setting up the first two boards. In choosing the Northern Pennines as the area of one board we have selected a part of England which contains perhaps the largest concentration of the special problems and needs to which I have referred.
The area chosen is one of some 3,000 square miles, from the Scottish border in the north to the Skipton gap in the south. It is a sparsely populated area, with no town exceeding a population of 2,500. It is therefore heavily dependent for its livelihood on employment in agriculture and forestry, and to some degree on tourism. Its 6,000 farms are almost all of an upland or mountain character, devoted mainly to the rearing of stock. More than two-thirds of them are below the commercial level of size as defined in the Act. Forestry, both State and private, is active in the extreme north of the area, but further south the land is relatively bare of trees. Two national parks—those of Northumberland and the Yorkshire Dales—are wholly included in the board's area. The board, I am sure, will seek close and friendly relations with the national park authorities, with whose work I see that of the board as being in many respects complementary.
The House may like to know that before settling upon the proposed boundaries of the area we consulted over 100 local authorities and other interested organisations. I think it is fair to say that their response was very nearly unanimous in support of the proposal to establish a board. We felt, therefore, that we could count on a substantial measure of good will in the area; and this impression was confirmed by the relatively small number of objections which were received when the boundaries were published last year. Most of these related to quite small areas of land; and many of them were concerned simply with the fact that a farm or an estate would be divided by the boundary.
We were able to meet a number of objections straight away from agreeing minor adjustments of the boundary. The remainder—18 in number—were the subject of local hearings taken by Mr.

H. E. G. Read, a distinguished land agent and a former president of the Chartered Land Agents Society. I offer him our thanks for the patient and helpful way in which he conducted the hearings and for his very clear report.
The draft Order before the House incorporates all the modifications recommended by Mr. Read, with one exception where, in the light of a defect in procedure which has been alleged, we have undertaken to provide an opportunity for a fresh and independent hearing of the issues. These modifications have reduced the area by some 50 square miles, mainly on the eastern side.
As well as defining the boundary of the board's area, this Order establishes the board itself. Hon. Members will know that the Chairman-designate is Mr. T. J. Cowen, M.B.E., a well-known figure in farming circles, particularly in the North of England, who has a wide knowledge of the area. He will have a strong team to assist him. The majority are people with special interests and experience in agriculture or forestry. Three other members will bring a special knowledge of the problems of rural economy.
I am pleased to inform the House that arrangements are in hand to acquire premises for the board's headquarters near Appleby, in the county of Westmorland.
The House will note that the Order provides for the board to come into operation as soon as it is made. If the House approves the Order, I hope that this will be in about a month's time. The House will, however, also wish to note that under Article 4 of the Order, certain of the board's powers will not come into effect for a further period of three months. This is to provide time for the board to establish itself and make the preparations necessary to avoid delays when the powers come into force.
I feel sure that hon. Members will agree that this board, which will have far-reaching and important effects on a big area of the country and on an important sector of the community, should get to work as soon as possible. I am equally sure that hon. Members will wish the board every success.

12.43 p.m.

Mr. Michael Jopling: On behalf of my hon. Friends, I give a


qualified welcome to the Order, which, as the Joint Parliamentary Secretary said, sets up the North Pennines Rural Development Board. We are grateful to the Minister for his comments, but a number of questions remain to be answered.
As the hon. Gentleman said, when the 1967 Act was going through the House my hon. Friends gave broad support to the concept of rural development boards. However, we have always been convinced that they can succeed only given the good will and support of the people in the areas which they cover.
The hon. Gentleman referred to this, but he did not refer to the massive opposition that there has been to the Welsh Board. I would be out of order if I developed this theme at length, but it is worth recalling that the North Pennines Board has been viewed in a completely different atmosphere from the Welsh one and that opposition to the North Pennines Board has not been nearly as apparent. Most of the objections in this case have been about detail and not about principle.
My hon. Friends opposed the setting up of the Welsh Board because it did not have the good will of the area. Would the hon. Gentleman explain why the setting up of the Welsh Board has been leap-frogged, so to speak, by the North Pennines Board, the objections to which came in later than the objections to the Welsh Board? We should be given an interim statement on the fate of the Welsh Board. Will the hon. Gentleman do that?

Mr. Speaker: Order. Not in considering this Instrument.

Mr. Jopling: I appreciate your Ruling, Mr. Speaker. I thought that I would be out of order in discussing the subject.
We give qualified support to the setting up of the North Pennines Board because we believe that there is considerable local good will for it to succeed. I say "qualified" because we have certain misgivings, to which I will come later.
The Parliamentary Secretary said, in passing, that his right hon. Friend had upheld all the recommendations but one of the inspector, Mr. Read, who I am sure did a wonderful job in hearing the

arguments that were put to him. I gather that while the inspector recommended that certain parts of Westmorland should be included, they have not, for technical reasons, been included. I also understand that there is to be a rehearing of objections at a later stage, particularly Mr. Dargue's objections and those relating to Forest Hall. What technical reasons prevented the Minister from accepting Mr. Read's recommendation in this respect and when is the rehearing expected to take place?
The arrangements announced so far for the Board seem reasonably satisfactory, including those who are to comprise it. The appointment of the chairman is a first-class choice because he knows the area well and, as the hon. Gentleman said, has had long and distinguished service in agriculture, particularly through the N.F.U. The other members of the board are deeply concerned for the well being of the vast upland area which the k Board will cover.
Under Schedule 5(2)(3) of the 1967 Act, there is provision for paying salaries to members of these boards. Is it proposed to pay salaries to the chairman, vice-chairman and members of this board, and, if so, how much?
I have been pressing for a long time for the headquarters of this board to be established in North Westmorland, an area which has suffered considerable depopulation and which is just the sort of place where the board can do some good. It is essential that rural development boards have their headquarters in areas where they can assist; through, for example, the employment opportunties which they generate. Although these opportunities are limited, it is helpful for headquarters of this type to be established in areas of this kind; and this particularly applies to this board's headquarters at Appleby, where, I understand, the Ormside Hospital has recently been vacated.
The proposals that have been announced about the staff of the board—two executive and six secondary staff members—seem reasonable and the cost, £20,000 in the first year, is not excessive. I am glad that it is not proposed to set up the board on too grandiose a scale and I hope that the figures for staff and cost will not grow excessively over the years.
Why has there been so much delay? It seems extraordinary that the chairman was appointed in April of last year while the board members were not appointed until the following 20th December, information which I gleaned from a Parliamentary Answer. The inspector to hear objections was not appointed until December last. What was the reason for the seemingly unnecessary delay between the announcement of the chairman and the announcement of the names of the other board members?
My hon. Friends believe that there is a job to be done in the upland areas. It is important to give assistance so that we get better sized holdings and amalgamate holdings wherever possible. It is important for us to find a way to intergrate forestry into the upland economy. It is equally important, if possible, to integrate forestry into the economy of the tenant farmer. I know that this leads to all sorts of problems, but more work needs to be done.
The importance of forestry is very largely that of the intensity of labour needed. In upland hill farming, in general terms, the labour requirement is one man to 500 acres, but in forestry it is, roughly speaking, one man to 100 acres. By bringing more forestry to areas which have suffered from depopulation we can expect to get more people there, and in that way get a more thriving population.
In the upland areas, too, there is an important job to be done in encouraging better public services. In my constituency, part of which will come under the board, there is great trouble over such services as snow clearance, telephones, and the efficiency of the mails. I hope that the board will do what it can to encourage better public services in these remote areas.
I hope that the board will encourage the repair of old buildings. There has been a serious trend in recent years towards the demise in country areas of the small jobbing builder, and the board should find some means of keeping more of these small builders in being for this repair work.
I should like to know what, in the next five or six years, the board will be able to do in connection with the Commons Registration Act. Common land is now being registered, and in the early

'seventies there will be legislation to allow commoners to manage their common land, and farm it better. Far too much of it is at present over-stocked and under-farmed, and dealing with this aspect could well be one of the most important functions of the board, of whose area one-fifth or one-sixth—a vast tract—is common land. When the second stage of the commons legislation is passed, rural boards will be able to give active assistance to improving that land and seeing that it is better farmed.
The board will have an important job in the encouragement of tourism and the use of amenities and scenery, but we on this side have some misgivings on this score. Many of the recently set up organisations seem to have this same function of the encouragement of tourism and the use of amenities and scenery. The rural development boards are being given powers to encourage tourist caravan and camping sites, and other organisations have in recent years been given similar powers. An instance of this is the powers given to local authorities under the Countryside Act, 1968. The Development of Tourism Bill will give similar powers for the improvement of hotel and boarding house accommodation, and the rural development boards are being given powers to improve accommodation of one sort or another in houses occupied by farmers. Many of the other functions of rural development boards are already performed by other organisations, particularly the Ministry of Agriculture. There is great danger of overlapping.
The Board will have the very delicate job of co-ordination and encouragement, and I hope that it will not grow to become something else.
This leads me to my second misgiving. Under the 1967 Agriculture Act, the boards have wide, almost tyrannical powers over such things as the sale of land. We were very unhappy about some of those powers when that Measure was going through the House, and we continue to be unhappy about them.
So far, in the way in which this board has been set up, and from some of the things that have been said by members, there is little reason to feel that the board will use its powers unfairly or unreasonably, but if those powers are used in a dictatorial spirit, we on this side


will take a very jaundiced view of the whole operation of the board in general.
The board has an important job to do in the upland areas, many parts of which are not thriving as they should. Depopulation and run-down are apparent. We are concerned about the growth of bureaucratic institutions in recent years, but we offer the Northern Pennines Rural Development Board our good wishes. It has a job to do, and we should give it every opportunity and encouragement to do it. If after a number of years we feel that it is not doing the job but is merely becoming another bureaucratic extravagance, we reserve the right then to wind it up. That aspect, however, is not in my mind now. As I say, we wish the board well and hope that it has a fair wind to do its important job.

12.57 p.m.

Mr. John Mackie: With permission, Mr. Speaker, I should like to answer one or two of the points made by the hon. Member for Westmorland (Mr. Jopling). When he said that he was giving the board a qualified welcome I thought that he would be most unenthusiastic, but he was really enthusiastic. In view of your ruling, Mr. Speaker, I cannot reply to him on the subject of the Welsh Board.
The hon. Gentleman referred to salaries. The chairman of the board will get £3,500 a year and each member of the Board will get £10 per meeting. The secretary and the chief land agent will be paid £3,850 to £4,000 a year. Those are the main salaries that have been agreed.
I am glad that the hon. Gentleman is pleased with the choice of Appleby for the headquarters. The old hospital has been taken over. It is a good building and worth putting right at what is a very reasonable cost. It should be very satisfactory.
There has not been the undue delay to which the hon. Gentleman referred. This is a new conception of doing something in rural areas. It is a complicated business. We appointed the chairman, and then discussed with him the question of getting the right people. The hon. Member will know that in getting people to do public work one has to find out whether they are willing to do it, whether they are suitable for it, and so on. At the same time, we had to satisfy the hon.

Gentleman about the many questions he asked on the subject. Although it may seem a long time since the passing of the Act, the chairman of the board has been selected for quite a time, and is no doubt giving thought to what he has to do.
The hon. Gentleman said he would like to see a balance between agriculture and forestry. There has been almost an antagonism between the two in the past, and it is one of the things we hope that the board will be able to deal with. This balance is regarded all over the world as being of tremendous advantage to these two sides of agriculture, and we want to see the same balance in this country. We know that in this area forestry uses more people than does agriculture, and more forestry would be of great help there.
No doubt the chairman has heard what the hon. Member has said. I will see that he gets a note of what appears in HANSARD. Commons registration is an extremely complicated business, and I hope that the hon. Gentleman will not expect me to go into details. He has raised the question of overlap by various amenity and other bodies. Doubtless the board will have to liaise with these other bodies and I am sure that the chairman will take that into consideration.
I am sorry that the hon. Gentleman had to speak about "tyrannical powers "—overstepping even his own somewhat extravagant language when dealing with the compulsory purchase of land. I am glad to have the opportunity to put this into perspective. The rural development board is in quite a different position from most other public bodies when it comes to compulsory purchase. It is far more restricted than public authorities, which have the power to acquire land compulsorily for schools, roads etc., although they always proceed by agreement where possible. The board may also buy land for such general functions, but only by agreement.
This is spelled out in Section 46 of the Act. When that Act was going through the House we were happy to accept an Amendment which made it clear that the board could only purchase land by agreement for these general purposes, where the board is carrying out its normal duties, which may include such things


as improving farms, laying on services or providing houses for tenants. In such circumstances it has no powers to buy compulsorily. There are circumstances in which it may do so and the hon. Member may well ask when these will be used. I hope that they never will be.
They will be available in special circumstances. One such circumstance is purely defensive. If land is transferred or sold, notification must be given to the board. If it is transferred in breach of this requirement then the board has this power. If someone has broken the law in selling land without the consent of the owner it can be compulsorily purchased. If, in later years, the board was to bring forward a special scheme under Section 51 of the Act for a particular locality it has this power.
However, in such a case, the scheme has to enjoy the overwhelming support of those living in the locality. It is just conceivable that one or two individuals might obstruct the scheme, and the board would have no option but to act by compulsory purchase. Only in these circumstances can it do so, and then only with the Minister's authority. The board would have to have a cast-iron case to persuade the Minister to approve of such a course.

Mr. Jopling: Would the Minister deal with another question, about the recommendation of the inspector that certain land in Westmorland should be included in the board's area? The Minister was not able to accept that?

Mr. Mackie: This arose because the land-owner alleged that evidence relating to his land was presented at the hearing without his knowledge, and without his being able to reply to it. The inspector wanted to be absolutely fair and the hearing for this extra bit of evidence is to be arranged as soon as possible after the board has been established. We hope that we can get it done immediately after the holidays.
In spite of the hon. Member's so-called qualified welcome, I am sure that he realises the importance of this Order. It will have an effect over a huge area and on a large proportion of the population. We hope that the effect will be a good one and I trust that the House will accept the Order.

Question put and agreed to.

Resolved,
That the Northern Pennines Rural Development Board Order 1969, a daft of which was laid before this House on 1st July, be approved

Orders of the Day — SYNODICAL GOVERNMENT MEASURE

1.5 p.m.

Sir Eric Fletcher: I beg to move,
That the Synodical Government Measure, passed by the National Assembly of the Church of England, be presented to Her Majesty for Her Royal Assent in the form in which the said Measure was laid before Parliament.
I am moving this Measure in the absence of my hon. and learned Friend the Member for Brigg (Mr. E. L. Mallalieu), whose name appears first on the Order Paper, together with the names of other hon. Members on both sides of the House. My hon. and learned Friend has asked me to explain that he is unavoidably detained elsewhere. When Measures passed by the Church Assembly come before this House for approval they have, in recent years, needed very little commendation or explanation. This Measure seems to be of such substantial historical and constitutional importance that I imagine the House would expect something to be said about it before it is put to the vote.
The Measure provides a very substantial reorganisation of the existing machinery of church government. One of its main objectives is to simplify the present machinery and in particular to increase and strengthen the voice and status of the laity in decisions about matters affecting the Church of England. In doing so, the Church is carrying one stage further a process that has been in operation for some time. In so far as the laity will in future be much more closely integrated with the bishops and clergy in the management of church affairs there is a restoration to the practice of the early Church when there was only a blurred division between the clergy and the laity and when the affairs of the church in a locality were decided by the whole body of Christian people.
Hitherto, the government of the Church of England has been embodied in two systems. The Convocations have had an exclusive jurisdiction over certain


matters such as liturgy and worship although in recent years they have, as a matter of courtesy, consulted the laity. Ultimately, lay control has been secured by reason of the fact that Parliamentary sanction was required for any canons passed by Convocation. Equally, Parliamentary control has been exercised over measures coming from the Church Assembly by reason of the fact that the assent of both Houses is required before any Measure can be presented to Her Majesty for assent.
The House would wish me to say something about, not the details of this Measure, but such impact as it may have on the position of Parliament. In so far as the influence of the laity in matters of Church government is very considerably strengthened, it will, I think, have this effect. In the 25 years or so since I became a Member, I have heard a number of debates in the House on Measures coming from the Church Assembly. I have heard it said that the House should jealously exercise its constitutional powers of examining Measures from that Assembly, particularly when minorities have dissented from proposals, because, in a sense, this House is more representative of the laity than the House of Laity in the Church Assembly. I do not say that I have assented to that proposition, but I have heard it urged.
In so far as the laity in the Church Assembly, which by this Measure will be renamed the General Synod, have much greater power and influence over Church measures, that argument must lose some of its effect. That will not deny this House the responsibility of examining any measures to which there is a large dissident minority. But it is also true to say that in my experience the attitude of this House in recent years has been that when the Church, through its own procedure, has reached certain conclusions about its own domestic affairs, the duty of the House is to accede to the wishes of the Church and not interfere.
I do not propose to explain the details of the Measure, which has been widely approved by all three Houses of the Church Assembly. There was some debate as to the franchise, but baptism has been accepted as the franchise in the so-called General Synod and communicant status has been accepted as the

qualification for representation on the parochial church councils, general synods, diocesan synods and the House of Laity.
There are two matters which, I think, will particularly interest the House. The first is the procedure which will in future have to be adopted when matters concerning worship, doctrine and liturgical changes are introduced. The two convocations hitherto have had exclusive rights in these matters, and, when the Measure becomes operative, they will retain a veto. Effect is given to that by Article 7 in the First Schedule. The House may be interested to see what the future procedure will be if, for example, a proposal is made for a change of relationship between the Church of England and another Christian body. We all have in mind the recent discussions and decisions about Anglican-Methodist reunion. If this Measure had been in operation a few days ago, or in recent years, the procedure under which those decisions were reached would have been quite different.
The House will know that the effective decision made earlier this week was reached by the two Convocations sitting jointly without any representation of the laity. Under this Measure, if a proposal comes forward from the Church for a scheme of constitutional union with some other Christian body, as I hope it will, the procedure will be as follows. The final decision will rest with the General Synod consisting of the bishops, the elected clergy and the elected lay members of the General Synod.
May I say, in parenthesis, that the machinery for electing the lay members of the General Synod will be considerably strengthened by this Measure. There will be in future the direct election from the ruri decanal synods to the House of Laity. But, whereas the final decision will rest with the General Synod. Article 8 of the Second Schedule requires that such a scheme of unity would first have to be approved by a majority of the dioceses at meetings of their diocesan synods. That is a procedure which we should welcome because the laity will be fully represented on the diocesan synods.
In so far as there will be a more democratic election to the diocesan synods and to the House of Laity, it will have the effect of enabling pressure from what is sometimes called the grass roots in the church to be more effective. In


so far as Anglican-Methodist union is concerned, it is true to say that the scheme recently approved by Convocations, but by an insufficient majority, is more ardently desired in the grass roots of the Church and among the laity, where it is not exposed to some of the more refined theological objections from diverse quarters which have been made.
Therefore, my view is that this reorganisation in future for church government is eminently to be desired. I should add—and here I express a personal opinion—that some of us regret that the scheme was not accepted by a 75 per cent. majority of the Church of England. Some of us may doubt the wisdom of the convocations in imposing upon themselves a self-denying ordinance which required a 75 per cent. majority.
Be that as it may, one is entitled to say that we in this House, of course, are accustomed to reaching decisions by simple majorities. The Church of England is more charitable and more generous to its minorities, but the corollary of that is that substantial majorities may feel themselves much more frustrated. Therefore, I wart to stress that, while I commend this Measure to the approval of the House of Commons, one must bear in mind that, for a variety of procedural reasons, there must be a substantial delay before the Measure is brought into operation.
Those who are interested in form, as distinct from substance, will find that the operative Clause 1 of the Measure merely says:
It shall be lawful for the Convocations of Canterbury and York to submit for Her Majesty's Licence and Assent Canons in the form set out in Schedule I to this Measure.…
Therefore, the form of legislation is for the Convocations, with Her Majesty's Assent, to pass Canons. Those Canons will be in the form set out in Schedule 1. There will be a reference in the Canons to Schedule 2 and when these procedural steps have been taken it will then, I understand, be open to the Archbishops of Canterbury and York to bring into operation the new machinery of synodical government set out in Schedule 2, which sets out in detail the constitution.
The point I am trying to emphasise is that I personally hope that the provisions of this Measure and the inevitable delay

in bringing it into operation will not be used by the authorities of the Church of England as an excuse for delaying what I regard as the necessity for continuing to make progress with the discussions with the Methodists for a scheme of union. I think that it would be deplorable if the present momentum were lost, and I think that perhaps the most relevant new factor that has been introduced into the situation is that the Methodists, by a very large majority indeed, have declared themselevs in favour of the Scheme.
I hope that, in days to come, the expression of views by 69 per cent. in the Church of England will lead the Convocations to take the view that they have a duty, before this Measure comes into operation, to consider the wishes of the large majority and also to bear in mind, insofar as the laity have been able to express it, their wish for progress towards this particular constitutional change. If the Convocations adopt that view, various legislative processes will be required, partly by Measure and, in some cases, by Bill, and, therefore, this House will have an opportunity of considering what legal and constitutional changes are involved.

1.25 p.m.

Mr. W. R. van Straubenzee: The right hon, Gentleman the Member for Islington, East (Sir Eric Fletcher) has commended the Measure in such clear and helpful terms that it is unnecessary for any other hon. Member to speak more than briefly—at any rate, those in support of the Measure, as I am. I hope that the House will give its approval to the Measure going forward to Her Majesty.
As does my hon. Friend the Member for Chelsea (Mr. Worsley), I serve in the present House of Laity and have, therefore, had the opportunity of seeing the present machinery at work at first hand. I have no doubt that the very extensive reorganisation set out in this Measure is a very great improvement.
I believe that the right hon. Gentleman was right to stress that the Measure will bring effective lay participation into the government of the Church in a way which has not been the case up to now. It will also thereby remove some difficulties which face the Church of England


because of discussions taking place separately between the laity together on the one hand and the clergy together on the other. It is highly desirable, in my view, that these discussions should henceforth take place together.
I also underline what the right hon. Gentleman said about the basis of the franchise. If here were plenty of money available and the Church had an extensive organisation of electoral registration and returning officers, no doubt it would be the Church's wish to have direct election from the parish up to the new synod. But, as we understand very well as parliamentarians, this is a very expensive process and thus I think that it is probably an agreeable half-way house, at any rate for the moment, that elections shall take place on a deanery as opposed to a diocesan basis, which is what they are at present with the present House of Laity.
I think, however, that it would not be proper for any avowed member of the Church of England to leave the House of Commons in any kind of doubt as to the importance and significance of this Measure, as the right hon. Gentleman pointed out. It is, in its way, a very historic document and represents the grant of another stage of self-government to the Church of England. I do not hide my own hopes that, in the course of years—and I mean in the course of years—the Measure will be superseded by another by which the Church of England, having operated this procedure effectively, as I believe it will, will be given totality of self-government, at least over its worship, the order of its services and the like. Therefore, I do not think that one should hide the importance of the Measure.
As the right hon. Gentleman said, there is sadly and wearily upon the consciences of many members of the Church of England the outcome of the vote in Convocations. It is relevant to this Measure in that so many of us had hoped that this new procedure would be one which our Methodist friends would, in the course of time, have shared with us. As we speak today, at any rate, that hope is not to be fulfilled, and an Anglican is uncomfortably in the position of knowing that his Church may be a very large Church in size, but the Methodist Church is the greater Church in stature.
The most important thing about this Measure to me is that it is hoped that the new procedure, if the House so gives its assent and it receives the Royal Assent, will be operative by the autumn of 1970. If the Church of England therefore should delay until then making a second decision about Anglican-Methodist unity, it would, as the right hon. Gentleman pointed out, have to be under the operation of Article 8 of Schedule 2, which, as he also said, required the question to come down again to the diocesan synods because it is, in the words of that Article,
a scheme for a constitutional union or a permanent or substantial change of relationship between the Church of England and another Christian body".
That requirement is a very proper requirement in the Article. It is a very wise safeguard, but in the context of present matters it must be remembered that if we do run over next autumn the Church of England will then have to operate this lengthy procedure, and matters will then have to be referred back to the dioceses. Inevitably, the delay in achieving organic union by stage one will be put back by many years, and I therefore think that there are very many of us who profoundly hope that it may be possible during this coming year, before this Measure actually comes into operation, for the Convocations to have the chance of a second thought
I only add this one point if I may be allowed to say this word. I had not, previously, realised how many hon. Members of the House, on both sides, and how many members of the staff of the House have taken a personal interest in these particular proposals for union, and how widespread is the sense of sadness at the present stage of the negotiations.
With these words, I would hope very much that the persuasive speech by the right hon. Gentleman will commend the Measure to the House.

Question put and agreed to.

Resolved,
That the Synodical Government Measure, passed by the National Assembly of the Church of England, be presented to Her Majesty for Her Royal Assent in the form in which the said Measure was laid before Parliament.

Orders of the Day — CLERGY PENSIONS (AMENDMENT) MEASURE

1.31 p.m.

Sir Eric Fletcher: I beg to move,
That the Clergy Pensions (Amendment) Measure, passed by the National Assembly of the Church of England, be presented to Her Majesty for Her Royal Assent in the form in which the said Measure was laid before Parliament.
This is a very short and simple and highly technical Measure, passed without division in the Church Assembly. I think that it should commend itself to the House.

Question put and agreed to.

Orders of the Day — EMPLOYERS' LIABILITY (COM- PULSORY INSURANCE) BILL

(Changed from Insurance (Employers' Liability) Bill.)

As amended (in the Standing Committee), considered.

Clause 1

INSURANCE AGAINST LIABILITY FOR EMPLOYEES

1.32 p.m.

Mr. David Watkins: I beg to move Amendment No. 1, in page 1, line 12, at end insert:
(2) Regulations may provide that the amount for which an employer is required by this Act to insure and maintain insurance shall, either generally or in such cases or classes of case as may be prescribed by the regulations, be limited in such manner as may be so prescribed.
The purpose of the Amendment is to enable the regulations to prescribe a limitation on the amount of insurance cover to be provided if it turns out that discussions with the interests concerned show this to be desirable. There was a previous mention of limitation by the Under-Secretary of State in the Standing Committee on the Bill. He said on that occasion that insurers might not be prepared to accept unlimited liability in all cases, and it might be necessary to lay down a maximum liability for each employee.
Since the conclusion of the Committee stage there have been discussions between representatives of the insurance market and myself, and there have also been extensive discussions between insurers and the Department and, I may say, between the Department and myself. These discussions have shown that insurers do feel some disquiet about accepting an unlimited liability. Although, hitherto, they have commonly accepted unlimited liability in this field they have taken cognizance of the fact that there is increasing difficulty in the reinsurance of risks, and they have also pointed out a precedent in other, recent legislation, which has set down a maximum liability.
A particular precedent is established in the Nuclear Installations Act, 1965. It lays down the limitation of £5 million per occurrence. I would point out that this Amendment does not make it mandatory that there should be a limit, but it would allow one to be applied by regulation should this prove to be desirable, and, of course, prove to be desirable consequent on discussions with all interested persons and representatives of all interested bodies. It is quite clear that the sort of limit which insurers are thinking about would be a large one.
The matters I have referred to would be determined in regulations, and the parties to the discussions to which I have referred, so far are talking of a limit of about £1 million for each occurrence. The highest bid for damages arising out of one occurrence which I have been able to trade was about £200,000.
This is a desirable Amendment. It follows on very close consultations with very considerable authorities. It would make the Bill much more workable in practice. My fellow sponsors and I have had the assistance of the Department and of the parliamentary draftsmen in preparing the Amendment.

Mr. David Mitchell: There are a few points I want to make. The Amendment is not particularly controversial, but I think that we ought to hear a little more about the circumstances in which an employee's claim against the employer would not be covered by this policy.
The hon. Member for Consett (Mr. David Watkins), who introduced the Bill and took it through Committee, has been


very helpful in meeting the comments which have been made about it. He mentioned the nuclear explosion. I realise, of course, that this is a totally exceptional circumstance which is out of all relation to normal business and commercial life, but are there any other circumstances less than that? We ought to know.
The second point is that since the Minister is taking some responsibility for the Bill we ought to have an assurance from him that the purposes of the Bill will not be, so to say, defeated by passing this Amendment and that the Government, for their part, are satisfied that the effect of the Amendment will be perfectly satisfactory.
Thirdly, this underlines the importance which has to be attached to the drafting of the regulations when they are made, for it underlines the fact that those regulations will be of a considerably complex nature.

Mr. David Watkins: By permission of the House, I would briefly reply to the points made by the hon. Member for Basingstoke (Mr. David Mitchell). He raised the issue of the circumstances of a claim being covered. The answer to that is that it would be covered completely up to the maximum of £1 million. That is a very high figure. I do not think that there should be any difficulty in that respect.
As to the matter of the Nuclear Installations Act to which I referred, that, of course, is something which is quite separate from this Bill. That matter is covered by a separate Act of Parliament. I am very conscious of the hon. Member's concern, and I know the concern of all Members of the House, about the powers for regulations, but I can assure them that there is every intention—and I am glad to add my support in putting it into the official record of the House—that the regulations would only be made following the most detailed discussions. The hon. Member will remember we discussed this at some length in Committee.

Mr. David Mitchell: Is the hon. Gentleman able to commit the Government in the way he is now doing? Perhaps he should clarify that situation for us.

The Under-Secretary of State for the Department of Health and Social Security (Mr. Norman Pentland): My hon. Friend

cannot commit the Government, but the Government have assisted him in putting the Bill into shape. I do not want to develop what my hon. Friend has said, but we accept his arguments and I therefore recommend the Amendment to the House.

Mr. R. W. Brown: Although I am fully in agreement with the Amendment, I am a little worried about what happens if an insurance company produces a facile argument and says that it will not pay. Will there be sufficienet power to ensure, when the employer has complied with this requirement, that the insurance company will also comply?

Mr. David Watkins: I have had three interventions in succession—

Mr. Deputy Speaker (Mr. Harry Gourlay): Perhaps I should clarify the position. As the mover of the Amendment, the hon. Gentleman has the right to speak more than once.

Mr. Watkins: My hon. Friend the Member for Shoreditch and Finsbury (Mr. R. W. Brown) is anticipating later Clauses of the Bill. I cannot commit the Government, but what I have said is largely what has been said by my hon. Friend the Under-Secretary of State in representing the position of the Government at earlier stages of the Bill. The situation referred to by my hon. Friend the Member for Shoreditch and Finsbury is unlikely to arise because the limit is £1 million.
I hope that my hon. Friend will accept this and that the House will accept the Amendment.

Amendment agreed to.

Mr. David Mitchell: I beg to move Amendment No. 17, in page 1, line 14, leave out paragraph (a) and insert:
(a) ' approved policy ' means a policy of insurance which, as respects the liability which is required to be insured under this Act, is not subject to any conditions or exceptions which have been prohibited by regulations:
Provided that nothing in the regulations shall prevent an insurer who has paid any sum in or towards the discharge of that liability by virtue only of such regulations from recovering that sum from the person on whose behalf that sum was paid.

Mr. Deputy Speaker: With this Amendment the House can discuss also Amendment No. 2, in page 1, line 15, leave out 'except such as may be permitted ' and insert ' prohibited for those purposes'.

Mr. Mitchell: The first part of Amendment No. 17 covers the same ground as Amendment No. 2, in the name of the sponsor of the Bill. It deals with the point made by the hon. Member for Shoreditch and Finsbury (Mr. R. W. Brown) and I imagine that on both sides of the House there will be acceptance of the first part of the Amendment.
The second part of Amendment No. 17 represents a difference of view from Amendment No. 2 and it is that part to which I wish to direct the attention of the House. It ensures that an insurer may recover from an employer who has breached the terms of the policy. The situation might arise in which a claim may be made, for example, by an employee in an engineering works who had damaged his hand or was injured by a piece of machinery.
In defiance of the terms of the policy, the employer might have failed properly to service the machinery, have failed to instruct the employees to use the safety devices or have connived at safety devices not being used. The terms of the policy might, therefore, be breached by the employer and, unless the Amendment is made, I am advised that the insurer would be unable to recover from the employer because of his failure to carry out the terms of the policy.
An employer might short-sightedly have broken safety regulations and, as a result, a man may be injured. The Insurance company may pay out but, unless the Amendment is made, the insurance company will have no claim on the employer for failing to comply with the terms of the policy.
The terms of the Amendment closely follow Section 206(1) of the Road Traffic Act, 1960, which is concerned with the possibility of an insurer wishing to sue a driver. That Section reads as follows:
… and any sum paid by an insurer or the giver of a security in or towards the discharge of any liability of any person which is covered by the policy or security by virtue only of this subsection shall be recoverable by the insurer or giver of the security from that person.

The amendment follows that terminology, and I commend it to the House.

1.45 p.m.

Mr. R. W. Brown: The hon. Member for Basingstoke (Mr. David Mitchell) has mentioned the point I had in mind. If I may quote an example of what actually happened, an employer in Glasgow was insured with an insurance company which accepted the premium for two years running. The employees in that firm were, therefore, happy in the knowledge that they were fully covered through the employers. It happened that there was a tragic accident in which 19 members of my union were killed. After a judicial inquiry and the prosecution of the employer for being in breach of the Factories Act, for which he was fined £500, the insurance company have reneged upon its responsibility and will not pay.

Mr. David Mitchell: The purpose of the Amendment is not to help the insurance company to renege on the policy, but to enable it to get the outpayments back from the employer who has breached the terms of the policy.

Mr. Brown: Yes, I take that point, but I am concerned that things shall not be made easier for insurance companies such as the General Accident Fire and Life Assurance Corporation. I would never insure with that Corporation, because it is not a responsible body. I therefore hope that the words in the Bill will ensure that when an insurance company is called upon to respond to the liability, it cannot do what the General Accident Fire and Life Assurance Corporation has done. It has behaved deplorably. Instead of accepting responsibility, it is trying to cheat people out of money to which they are entitled.

Mr. David Watkins: May I now move Amendment No. 2, which is grouped with this Amendment?

Mr. Deputy Speaker: Not at this stage. We are discussing both Amendments together, and what happens to Amendment No. 2 will depend upon what happens to Amendment No. 17. The hon. Gentleman can discuss Amendment 2 without moving it.

Mr. Watkins: Thank you for your guidance, Mr. Deputy Speaker. I will


speak to Amendment No. 17 and, in doing so, make reference to Amendment No. 2.
The sense of the two Amendments is similar, in that the hon. Member for Basingstoke (Mr. David Mitchell) and I have identical points in mind, although our approach is in a different form of words. What is at stake is the ability of an insurance company to recover from an employer who has not carried out the necessary safety regulations laid down as part and parcel of a policy.
I feel that Amendment No. 17 is not the best way in which to deal with this matter. It could well be done by regulation. I am sorry to harp once again on regulations, but we had a great deal of discussion in Committee about the difficulty of defining certain matters in the Bill. It could be made clear in regulations that there was no conflict between insurance requirements of the Bill and the interests of insurers in being able to recover sums which they have paid out to employers who have not observed the conditions of a policy.
The primary object of the Bill is to protect people who are injured at work and to ensure that they do not lose damages awarded to them through the normal legal processes of the country. Employees would be covered and would receive their damages.

Mr. David Mitchell: There is nothing in Amendment No. 17 to suggest that employees should not be covered. I am merely saying that without the Amendment in the Bill the insurer will be unable to recover from the employer. I am not satisfied that this can be done by regulation.

Mr. Watkins: I take the hon. Gentleman's point. I am convinced that this matter could be dealt with by regulation. I am in sympathy with the hon. Gentleman's objective, but I feel that possibly his Amendment would complicate the situation rather than ease it.
The hon. Gentleman referred to the Road Traffic Act, 1960, and cited it as a parallel. One difference between that Act and this Bill is that the Act lays down matters which in the Bill we have decided are best left to regulation. There is no basic difference in objective between

us, but there would appear to be a difference of approach. I feel that the matter can be resolved without our accepting Amendment No. 17, and I hope that the hon. Gentleman will be prepared to agree.

Mr. David Mitchell: At this stage, I feel that we ought to have the advice of the Minister on two points. The first is to confirm that he is happy that the matter can be covered by regulation, and the second is so that he may say whether or not he is satisfied with the wording of Amendment No. 17. It would be intolerable if an insurer had to pay out, without the right to recover from an employer who had failed to comply with the terms of a policy. This is a straightforward and simple matter which it is essential should be covered.

Mr. R. W. Brown: Surely, where a contract has not been complied with, action could be taken in the normal way through ordinary civil proceedings. If we try to cover every conceivable possibility, we shall tend to ruin the purpose of the Bill.

Mr. David Mitchell: Unless the Bill permits such a thing in the form in which it is now drafted, there will not be grounds for any civil action such as were indicated by the hon. Member for Shore-ditch and Finsbury (Mr. R. W. Brown). I am not a lawyer, and I hope that we shall have the benefit of the advice of the Minister, who presumably has consulted legal opinion on the matter.

Mr. Pentland: The purpose of Amendment No. 2 is to simplify the administration of the Bill both from the point of view of the Government and the insurer. There is such a wide range of special conditions applicable to individual employers and businesses that it would be an onerous task to have to list them all in regulations. There would always be the risk of some quite acceptable condition being overlooked. As my hon. Friend the Member for Consett (Mr. David Watkins) has said, the proper place for conditions of that kind is in regulations.
The Road Traffic Act has been cited as a parallel, but that Act was different in that the sort of provisions which in this Bill will be dealt with by regulations were written into that Act. The Government feel that Amendment No. 17 should be


resisted and the House should accept Amendment No. 2.

Amendment negatived.

Amendment made: No. 2, in line 15 leave out 'except such as may be permitted ' and insert:
'prohibited for those purposes '.—[Mr. David Watkins.]

Mr. Pentland: I beg to move Amendment No. 3, in page 1 line 18, leave out from ' Britain' to end of line 20 and insert:
'insurance business of any class relevant for the purposes of Part II of the Companies Act 1967 and issuing the policy or policies in the course thereof'.
This is a technical Amendment. The effect is to extend the definition of "authorised insurers" so that where the risk to be covered under Clause 1(1)—that is to say, employers' liability—is already covered by the employer in his arrangements for other forms of insurance, such as marine, aircraft, transport or motor insurance, that insurance will comply with the conditions of the Bill.
Hon. Members will understand that in the short time at my disposal before the Bill was taken in Committe, I did not have time for the full consultation that is sometimes necessary to get technical matters of this sort right. Since then my attention has been drawn to the fact that some employers engaged in merchant shipping, and trawler owners, already cover their employers' liability risks as part of their marine insurance which was carried by insurers authorised to carry on marine insurance business. Without this Amendment it would be necessary for these employers to take out fresh insurance cover with employers' liability insurers. This would be an unnecessary disturbance. A similar difficulty could arise in the case of airline operators and possibly in the road haulage field.
This Amendment therefore widens the definition of authorised insurers to take in all insurers lawfully carrying on and issuing policies in the course of insurance business of any class relevant for the purpose of Part II of the Companies Act 1967. The point is, of course, that the supervision of insurers is under the Companies Act 1967 a matter for my right hon. Friend the President of the Board of Trade, and we do not wish to duplicate that machinery, or to interfere

with lawful insurance policies. I recommend the Amendment to the House.

Amendment agreed to.

2.0 p.m.

Mr. Pentland: I beg to move Amendment No. 4, in page 2, line 1 leave out 'a person' and insert 'an employer'.
This is a minor technical Amendment to ensure that there is no conflict between paragraphs (b) and (d) of subsection (2) of Clause 1. It avoids imposing any requirement that an insurer, who otherwise fulfils all the conditions for approval, shall have a place of business in Great Britain.
There is probably no requirement that, for example, a Lloyds underwriter should have a place of business in Great Britain for him to be legitimately carrying on an insurance business within the meaning of Part II of the Companies Act 1967, and this Amendment will avoid imposing any such requirement. Paragraph (d) has always been intended to exclude from the scope of the Bill employers who have no place of business in Great Britain, except insofar as they are included by regulations.
I recommend that the House accept the Amendment.

Mr. David Mitchell: I see no reason why we should not accept what the Minister has said. I would not wish to oppose the Amendment.

Amendment agreed to.

Clause 2

EMPLOYEES TO BE COVERED

Mr. David Mitchell: I beg to move Amendment No. 18, in page 2, line 4, leave out subsection (1) and insert:
(1) For the purposes of this Act the term employee' means an individual who has entered into or works under a contract of service or apprenticeship with an employer whether by way of manual labour, clerical work or otherwise whether such contract is expressed or implied oral or in writing.
My reason for putting this wording forward rather than that which is in the Bill is that there is considerable ambiguity in the Clause as it stands. The sponsor and the Government have expressed the desire to cause as little disturbance as possible to existing policies.


The Minister expressed the desire to avoid disturbance to existing arrangements over marine insurance. I would draw the attention of the sponsor to the standard clause which occurs in most employers' insurance liability policies. I have a copy in my hand, which says:
Now this policy witnesseth that if any person under a contract of service of apprenticeship with the Insured (hereinafter called "an employee") shall, while employed in, or temporarily outside Great Britain, Northern Ireland or the Isle of Man or the Channel Islands, sustain bodily injury or disease caused during the Period of Insurance and arising out of and in the course of his employment by the insured in the Business …
The terminology here seems to be sufficiently different from that in the Bill as to cause embarrassment and the need for rewriting of policies, which it must be desirable to avoid.
Quite apart from that, there is considerable doubt which persons are covered, or are to be covered, as things now stand. There are two aspects. First, I would like clarification from the Minister as to who will be covered. It has been made clear that the self-employed window cleaner that you, Mr. Deputy Speaker, or I or my wife employs to clean our windows, will not be covered. There is no liability laid upon me or my wife when employing such a person to have a policy. This is because the window-cleaner is self-employed.
What about the jobbing gardener, or the boy scout doing a "bob a job"? Is there a liability here? What about the household help? What about the Member of Parliament's secretary? Is there a liability in relation to these personal types of services which so often people incur? Supposing a load of firewood or coal has been dumped at the front of my house instead of in the coal bin at the rear. Someone is employed to barrow it round. Under the terms of this Bill is there a liability imposed upon me to take out an insurance policy, and if I do not do so, shall I be subject to the various penalties laid down?
There is a great deal of casual labour. On which side of the fence will they fall? There are the hop-pickers and the casual workers whom farmers employ to help with the hay-making. Supposing one of these falls on a pitch-fork or is otherwise injured. Has the farmer a liability laid

upon him to cover that sort of casual labour? It would be unfortunate if the House passed a Bill rendering a number of people liable to severe penalties, yet failed to ensure that it was clearly understood by the N.F.U. and the multitude of ordinary people who pay for small services performed by people other than self-employed people. There is a considerable duty laid on the sponsor and the Minister to make clear what is the effect of the Bill in relation to these groups of people.
I have had the benefit of the advice of an eminent Queen's Counsel upon this matter. Mr. Marven Everett has looked into this question, as the Clause now stands, and he gives it as his opinion that "employee" is a very wide word. He says that "employee":
… is not, in my opinion, limited to those who are employed under a contract of service or apprenticeship. I employ my solicitor, I employ my accountant, but neither of them works under a contract of service. They work under a contract for services …In my opinion the framework of the existing draft subsection is consistent with the first part of the subsection being of general application and applying not only to contracts of service or apprenticeship but to contracts to perform services generally",
such as the accountant, etc., which I have described.
He says that the subsection as drafted is at least ambiguous. I do not think that the House would wish to pass into law something which, even before it reaches the Statute Book, lawyers are telling us is ambiguous. I am sure that the sponsor would be anxious to ensure that there is nothing in this Bill about which lawyers are already arguing. It is bad enough when we pass legislation which we think is watertight but which the lawyers thereafter discover is not. There then follows endless litigation. Here, before it becomes law, it is potentially ambiguous.
I hope that the sponsor of the Bill will accept the Amendment. I urge upon him, or upon the Minister, that we must have a clear idea of who is and who is not to cover employees under the Bill in relation to personal services and casual labour.

Mr. David Watkins: The hon. Member for Basingstoke (Mr. David Mitchell) has lucidly and eloquently laid before the House not only the general principle about which he is concerned, but also


some specific cases which he feels arise from it. I am not anxious to play any part in enacting legislation which is the subject of dispute even before it becomes an Act of Parliament. As the hon. Gentleman said, even when we enact what we consider to be crystal clear legislation, it can, nevertheless, often be the subject of considerable argument in the courts.
I have given considerable thought to this matter and had consultations about it. I should like to put the hon. Gentleman's mind at rest straight away by saying that I accept the Amendment and recommend the House to accept it. It gives a simplified form of the wording already in the Bill. I accept the criticism that, as at present worded, certain areas are in doubt which could be the subject of argument. If we can eliminate that state of affairs, it seems highly desirable that we should do so.
Concerning the more specific point about who is and who is not covered, this, as the hon. Gentleman will recollect, was debated at length in Committee. We were in some difficulty about precisely defining in an Act the word "employee". I think that my hon. Friend the Under-Secretary of State has taken some advice on this and may have something to say about the specific point, should he catch your eye, Mr. Deputy Speaker.
I remember the discussion that we had in Committee about the window cleaner. As originally drafted, if a window cleaner falls off his ladder and broke his neck the unfortunate householder or tenant was liable, so we amended the Bill with the specific purpose of avoiding that situation.
I accept the Amendment and I hope, in due course, that the House will accept it.

Mr. Pentland: I intervene briefly to assure the hon. Member for Basingstoke (Mr. David Mitchell) on certain points which he has raised. He will know that we went into this question at great length in Committee. We can visualise many aspects applicable to the Bill if we depart from the straight and narrow path of its intentions. The hon. Gentleman referred to odd jobs—boy scouts, window cleaners, and so forth. They are not working for an employer under a contract of service.

Mr. David Mitchell: They are not?

Mr. Pentland: They are not working for an employer under a contract of service and they are not carrying on a business. Therefore, the hon. Gentleman should be satisfied on that point.
As my hon. Friend has said, we are prepared to accept the Amendment.

Mr. David Mitchell: I am a little uneasy, because the Minister has just said that the people to whom I drew attention are not carrying on a business. Do I take it that all those who are not carrying on a business are not covered?

2.15 p.m.

Mr. Pentland: Certainly. I repeat that this is my hon. Friend's Bill. However, I thought that the real intention was to cover people who were employed under a contract of service. If someone's Aunt Sarah hurt her toe or has an accident doing something for the next door neigh-hour, it brings it to a ridiculous stage. I am saying that the people to whom the hon. Gentleman referred are not working for an employer under a contract of service, nor are they employed in the employer's business.
The hon. Gentleman will recall that in Committee we pointed out that a Member of Parliament does not employ people in the business of being a Member of Parliament. I hope that the hon. Gentleman will accept that.

Mr. David Waddington: The wording of the Bill is:
For the purpose of this Act the term employee' means an individual who has entered into or works under a contract with an employer".
Does the Minister agree that if those words stood alone they would cover many people who, under the present law, are self-employed?

Mr. Pentland: I do not know. This is a technical legal aspect of the Bill. We could become involved in arguing about the technicalities at great length. For the purpose of the Bill, they must be working under a contract of service. But, to be as helpful as possible, we are accepting the Amendment.

Mr. David Watkins: The point made by the hon. Member for Nelson and Colne (Mr. Waddington) is valid if the words stand alone. But the point is that they do not. They are further qualified.

Mr. David Mitchell: I think that we may have to return to this matter on Third Reading. The Minister, on behalf of his Department, has accepted responsibility for the Bill. He said just now, in response to my inquiry—

Mr. Pentland: I have never accepted responsibility for the Bill, as the hon. Gentleman knows very well. Nor have the Government accepted responsibility. What I have said, on behalf of the Government, is that there are desirable principles embodied in the Bill and we are prepared to assist to make it a worthwhile and practical Measure.

Mr. Waddington: I apologise for taking up the time of the House again. I appreciate that the sponsor of the Bill is accepting the Amendment, but I feel that the House should know where it is leading.
The point surely is that, as originally drafted the Bill would bring within its scope people who now are considered self-employed. Large issues are raised which were discussed at great length in Committee. At one time it seemed to be the aim of the sponsor to carry out far reaching reforms and to draw within the ambit of the Bill the majority of people who are considered self-employed.
The only point that we make is that the Bill, as originally drafted, almost certainly brought within its ambit the self-employed. I raise the matter now because many hon. Members on this side, and perhaps some hon. Gentlemen on the other side of the House, are anxious, through another Bill, to increase the liabilities which now rest on those who procure others to serve them as self-employed persons.
If we keep in the Bill,
the term ' employee' means an individual who has entered into or works under a contract with an employer",
it involves and covers almost every self-employed person and raises very large issues.
That is why we on this side of the House considered that acceptance of the Amendment by the sponsor was a matter of first importance.

Amendment agreed to.

Clause 3

EMPLOYERS EXEMPTED FROM INSURANCE

Mr. Deputy Speaker: The next Amendment selected is Amendment No. 14, with which we may discuss Amendment No. 15, in page 2, line 25, after 'control', insert:
(c) all corporate bodies for whom the register of companies issues for the current year a certificate certifying that their net assets exceed £250,000.

Mr. David Mitchell: I beg to move Amendment No. 14, in page 2, line 25, after 'control', insert:
(c) such public or private companies whose auditors certify that they have net realisable assets in excess of £250,000.
The Amendment will fall into its natural place for those hon. Members who served on the Committee.
The Bill relieves certain bodies of a liability to effect insurance cover against various eventualities set out in it, and the list includes nationalised industries. I have no desire for a party dogfight on this, or to be dogmatic about it. Clearly, they have the funds to meet a claim for employers' liability without having to insure, and, therefore, I do not quarrel with their being included in the list of exemptions.
But nationalised industries are often in competition with private enterprise, particularly in the fringe activities of selling and servicing things like electric and gas equipment. If they are to be exempted from paying the premiums there should also be provision that those private enterprise industries equally able to pay any foreseeable claim out of their own funds should also be exempted.
In Committee, I sought to assist the hon. Member for Consett (Mr. David Watkins) by suggesting a form of words which could cover a large section of private enterprise, and so achieve a balance in the Bill in the treatment of nationalised and private enterprise industry. I suggested that companies listed on the Stock Exchange as trustee investments should be exempted. The Minister argued that that would not give anything like the right and proper cover, and having looked very carefully at what he said I think that he was right.
Therefore, I have tabled Amendments Nos. 14 and 15, and I hope that the sponsor will take his choice from them. He does not have to accept both. If he accepts either I shall be happy that the balance that should be in the Bill is restored, and that it is left without any prejudice.
Amendment No. 14 speaks of
such public or private companies whose auditors certify that they have net realisable assets in excess of £250,000.
The hon. Member for Consett said earlier today that the largest claim he had been able to discover was £200,000, and I know that he has done a great deal of research and taken a great deal of care and trouble in going into the matter. The Amendment takes us well over that sum. It is the normal practice of the Inland Revenue to accept that auditors are not paid servants of the companies, hut stand between them and the Inland Revenue.
The Inland Revenue accepts what they say as a fair and impartial assessment of a company's financial position for tax purposes. Therefore, I would have thought that it would be entirely acceptable to the sponsor and the Government to rely on the same auditors to issue a certificate stating that the assets are worth at least that substantial sum.
But if, for some reason which I do not foresee, he is not prepared to accept Amendment No. 14, he should bear in mind that all these companies must file their returns with the Registrar of Companies. It would not be difficult for the Registrar to issue, on request from a company, a certificate certifying that its accounts showed that it had assets exceeding £250,000.
I leave it to the sponsor of the Bill to decide which Amendment he accepts, though I believe that it would be simpler to deal with the matter under Amendment No. 14.

Mr. David Watkins: The words "nationalised industries" and "private enterprise" are emotive on both sides of the House. But the fundamental point at issue is not whether there is discrimination between publicly- and privately-owned industry but whether the resources of any employing organisation are sufficient for it to meet any claim which might be made against it or are

not, in which case it must be compelled to take out insurance under the terms of the Bill.

Mr. Mitchell: indicated assent.

Mr. Waddington: indicated assent.

Mr. Watkins: I am glad to see that I have the agreement of both hon. Gentlemen on that.
Amendment No. 14 aims to provide automatic exemption from the scope of the Bill for certain employers other than local authorities and nationalised industries which could clearly meet employers' liability without insurance cover. I am not trying to make points against the hon. Gentleman, but I am advised that the drafting of the Amendment is defective. The term "public company" is technically a category not known in the Companies Act.
Moreover, it would be very difficult for an auditor to interpret the phrase "realisable assets". For instance, he would have to consider whether stock in hand was saleable and whether good will represented a realisable asset, which would be very difficult to define. It is not clear how often the auditors' certificate would be required; assets might well fluctuate regularly, possibly from day to day, in concerns handling the inflow and outflow of large quantities of goods, for example.
I am not just cavilling in saying that the Amendment is defective; I say it to underline the very real difficulty here. I have every sympathy with the hon. Gentleman's intention, but the acid test is whether the resources are sufficient to meet any claims against them. I sympathise with the manner in which the hon. Member has tried to define this question, but I do not accept that the Amendment is a good way of achieving his objective, for the reason that I have outlined. Although it may be disappointing to him, I feel that I must resist the Amendment.

2.30 p.m.

Mr. Waddington: We all know the objective of the Bill. It is to ensure that if a claim for damages is brought it will be met and will not be defeated because the claimant finds that the defendant has no means. Nationalised industries have been excluded because they are assumed


to have the financial backing to meet any claim. Nevertheless, I am disappointd that the sponsor should raise drafting points. We raised these points in Committee.
I invite the Minister to give what help he can in this matter. It is not good enough to say that although it is conceded by the sponsor that there must be many companies which do not need to insure because they have the necessary financial resources they must nevertheless insure because no way of excluding them can be devised.
We are surely entitled to ask the Minister for his thoughts on the matter, and to be told whether the Government have considered ways of excluding certain categories of company. This seems to be an unnecessary imposition on companies which are well able to meet claims of any conceivable size. The nationalised industries are to be excluded because it is acknowledged that they can meet these claims. I have not gone into the legal technicalities of the matter, but I am disposed to agree that my hon. Friend's Amendment presents technical difficulties.
Surely it is not beyond the wit of man to find some way of excluding from the ambit of the Bill large companies who can meet any conceivable claim.

Mr. David Mitchell: I hope that the Minister will give us the benefit of his advice on the matter. It will be a little unfortunate if the sponsor shelters behind a quibble over the wording of the Amendment. I should be quite happy if he were to say that he was prepared to recommend that in the later stages of the Bill—in another place—Amendments would be brought forward with different phraseology but nevertheless embodying the principal which I have tried to put before the House—namely, that there are private companies and major firms which can pay any conceivable claim out of their own resources, and have no need to go to the expense which the Bill would place upon them.
For that reason, I hope that the sponsor will assist the House. If he will accept my suggestion I shall not press the Amendment. If he will agree to the principle and will try to frame an Amendment in the proper phraseology to carry out the principle which my hon. Friend

and I have indicated I shall be happy to withdraw the Amendment.

Mr. Pentland: To clarify the position it may be as well for me to explain the Government's attitude. I take the point put forward by the hon. Member for Basingstoke (Mr. David Mitchell) and the hon. Member for Nelson and Colne (Mr. Waddington). As my hon. Friend has said, we have every sympathy with the intention of the Amendment. It would certainly be the intention of the Government, should the Bill become law, to provide for the exemption of employers whose financial position showed clearly that they need not be compelled to insure.
This matter was discussed at great length in Committee. However, there are difficulties in framing a satisfactory definition for the purposes of the Amendment, as I outlined in Committee. It is clear that considerable consultation will be necessary to produce a workable definition. It would be premature to adopt a hasty form of words at this stage. Adequate powers already exist to exempt other classes of employer, by Regulation. The Government undertake that there will be full consultation on the matter. I therefore support my hon. Friend in resisting the Amendment.

Mr. David Mitchell: rose—

Mr. Speaker: Order. I cannot prevent the hon. Member from speaking as many times as he wishes on the Amendment, but we are on the Report stage.

Mr. Mitchell: I am grateful to you for that guidance, Mr. Speaker. I rise only to beg to ask leave to withdraw the Amendment in the light of the assurance given by the Minister.

Amendment, by leave, withdrawn.

Mr. David Mitchell: I beg to move Amendment No. 13, in page 2, line 35, at end insert:
'and any successor local government authority whose liabilities are covered by the power to levy a rate'.
I need not detain the House for any length of time on this Amendment. The Bill lists a series of local authorities—the Common Council of the City of London, the Greater London Council, the council of a London borough, the council of a county, county borough or county district in England or Wales, and so on.
All these are forms of local government organisation which most hon. Members will appreciate as being—to put it at its lightest—at risk in terms of prospective legislation following the Redcliffe-Maud Report. Therefore, to ensure that no ambiguity or problem arises from exempting authorities which may not live for very much longer, I have adduced a form of words which I believe will be acceptable and will cover the point.

Mr. R. W. Brown: If my hon. Friend the Member for Consett (Mr. Watkins) will take it from me, having been through the exprience of London government reorganisation, I can tell him that it is normal form when such reorganisation takes place for the successor authority to accept the liabilities of its predecessor. That is common form. Therefore, I would have thought that if London were to go through another reorganisation the successor authorities would undertake the liabilities of their predecessors.

Mr. David Watkins: The hon. Member for Basingstoke (Mr. David Mitchell) has tried to anticipate the proposals contained in the Redcliffe-Maud Report. He is a little premature in that. The Amendment is not necessary. If local government reform is to be carried out there will have to be legislation, and that would be the appropriate vehicle for provisions transferring the functions of old local authorities to new ones. I therefore suggest that this is a superfluous Amendment.

Mr. David Mitchell: In the light of what has been said, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 4

CERTIFICATES OF INSURANCE

Mr. David Watkins: I beg to move Amendment No. 5, in page 2, line 36, leave out from beginning to ' shall ' in line 11 on page 3 and insert:
(1) Provision may be made by regulations for securing that certificates of insurance in such form and containing such particulars as may be prescribed by the regulations, are issued by insurers to employers entering into contracts of insurance in accordance with the requirements of this Act and for the surrender in such circumstances as may be so prescribed on certificate so issued.

(2) Where a certificate of insurance is required to be issued to an employer in accordance with regulations under subsection (1) above, the employer (subject to any provision made by the regulations as to the surrender of the certificate).

Mr. Speaker: I suggest that it would be convenient for the House to discuss at the same time Amendments Nos. 6, 7, 8 and 9.

Mr. Watkins: That is convenient, Mr. Speaker, since if Amendment No. 5 is accepted the remainder become consequential.
This group of Amendments deals with an important issue in the Bill. Its effect is to simplify the provisions concerning certificates of insurance. As the Bill is drafted, an employer will not satisfy the requirement to insure until the certificate has been delivered to him. The new subsection (I) substitutes the simple requirement that the insurer shall issue a certificate. The form of the certificate and other requirements are to be specified in regulations.
While Amendments Nos. 6 to 9 are consequential, they raise two points of substance. The first is that they dispense with the requirement for a statutory declaration by an employer who has lost or destroyed a certificate. This is at present contained in subsection (2). The second is that regulations can require an employer to permit the inspection of the policy, as an additional safeguard; that is, in addition to the certificate being provided.
This change represents another major simplification of the Bill. It also attempts what I might call a compromise between the view of certain insurers, who would like to see the certification requirement dropped, and my view, which I expressed in Committee. I believe that certification must remain because, for the purposes of enforcement, it is vital that trade union officials and factory inspectors should be able to see proof of insurance on demand. This point of view was, generally speaking, accepted in Committee.
As I have indicated, there are certain misgivings in the insurance market about this matter, on which lengthy discussions have taken place. I met representatives of the insurance market, and one of the points they made was their desire to see the onus to provide a certificate put


on the employer and not on the insurance company. After careful consideration and due consultation, I felt that I could not go as far as that; but the Amendment goes a long way towards simplifying the whole procedure and ironing out many of the difficulties of the insurance companies and the enforcement of the Bill.
It is not intended that the certification requirements should be so onerous as to upset the present working of the insurance arrangements, or that they should involve the payment of extra premiums by employers who are already voluntarily complying with the aims of the Bill; and I recognise that the majority of employers are probably doing so.
2.45 p.m.
In many occupations the insurance cover needed may vary not only from week to week but from day to day. I have ascertained that it is a common practice for an employer to find, due to the nature of his work, that the cover he requires is liable to change rapidly. For example, in the construction industry workers may be digging a trench 3 ft. deep at one stage and switch to digging a trench 6 ft. deep at another. Cover is then required in view of the danger of people falling into the trench or articles being dropped on people.
In these circumstances—the same can be said of other industries—it is normal practice for the insurance company to be telephoned, for the precise nature of the work to be explained and for the necessary extra cover to be given. The risk is immediately accepted and the employer is covered, with the premiums being adjusted retrospectively.
Without the Amendment, adequate cover in these cases could not be obtained until a certificate had been delivered; and many of the employer's operations might, in the interim, be brought to a halt. His only alternative might be to pay a much higher premium to cover all sorts of risk, many of which he might seldom need—a burden that I would not wish to place on employers.
The regulation-making power in the Clause, with the Amendment, will remain comprehensive and will enable any form of certification which is found to be desirable to be obtained. In other words, the question of a simple form of certification will be fully covered. The

power to require a certificate to be displayed will remain, and this will be backed up by the power to require an employer to produce the policy, should this be necessary; in other words, should it be impracticable to incorporate all the necessary information in certificates. It follows from what I have said that it may be impracticable to include all the detailed information which would be required in certificates, and the Amendment caters for this eventuality.
As I said at the outset, I recognise that the Amendment deals with a major matter. I have had the assistance of the Department and Parliamentary draftsmen in formulating the Amendment, which I trust hon. Members will find acceptable.

Mr. David Mitchell: While I accept the need for the Amendment, there is an important matter on which we should be clear. At what stage will the procedure for certification operate? There may be cases of employers taking on people—we can return to the question of who will be covered—who will want an assurance that they are covered by an insurance policy. Thus, the question of when the certificate must be displayed needs clarification.

Mr. David Watkins: It is intended that there will be consultations with all concerned about this matter. I realise that the point at which a certificate must be displayed is a nice one. In the light of the consultations I have had with insurance companies, I am prepared to use an old phrase and say that an insurance firm's word is as good as its bond. While there may be difficulties in supplying certificates immediately, or within, say, an hour's notice, once a contract has been entered into I am sure that it will be honoured.

Amendment agreed to.

Further Amendments made: No. 6 in page 3, line 14, leave out refered to in this section '.

No. 7 in line 16, leave out ' referred to in this section '.

No. 8 in line 21, at end insert:
(c) permit the policy of insurance or a copy thereof to be inspected by such persons and in such circumstances as may be so prescribed.

No. 9 in line 23, leave out 'subsection (2) or (3) above' and insert ' this section '.—[Mr. David Watkins.]

Clause 5

PENALTY FOR FAILURE TO INSURE

Mr. Waddington: I beg to move Amendment No. 10, in page 3, line 27, leave out ' to imprisonment not exceeding three months or'.

Mr. Speaker: I suggest that with this Amendment we take Amendment No. 11. The two are linked.

Mr. Waddington: The subject of imprisonment was raised in Committee by my hon. Friend the Member for Carlton (Mr. Holland), who has asked me to express his regret for not being able to be present today because of duties in his constituency. He apologises to the sponsor of the Bill and to all hon. Members for his absence.
All of us on this side of the House consider imprisonment to be a totally inappropriate penalty for failing to insure in breach of the terms of the Bill, and the sole purpose of the Amendment is to make a fine of £200 the only penalty. The Bill at present provides for imprisonment up to a period of three months. It is surprising to see such a provision, when it is generally accepted that short terms of imprisonment are not only very much out of fashion but run quite counter to modern trends in penology.
There are several reasons for saying that imprisonment is inappropriate in such a Bill as this. First, as I have just said, to impose it would be to fly in the face of all modern trends in penology. Secondly, to impose it would be a completely pointless gesture, a non-event, because as a result of Section 39 of the Criminal Justice Act 1967, any term of imprisonment of three months or less would have to be suspended, and I am sure that no one seriously suggests, bearing in mind how few will be affected by the Bill in any case, that people are likely to come before the courts for a second offence.
Thirdly, the penalty for imprisonment is entirely inappropriate here, because we must recognise that the Bill establishes yet another absolute offence. This is

rather unfortunate, after the recent occurrence in the case of Sweet v. Parsley. If we are to continue to create absolute offences, we must make it doubly sure that the penalties for them will not work any injustice.
I do not like the practice of inserting in Bills a power to impose imprisonment of three months, and no more. Very few people realise that the powers-that-be are not being generous when the limit the term to three months, and do not say four months, five months, or six months. All they do by so limiting the term is to ensure that the citizen who is exposed to penalty, including the penalty of imprisonment, does not have the right to have his case tried by jury.

Mr. David Watkins: I very much appreciate the apology made by the hon. Member for Nelson and Colne (Mr. Waddington) on behalf of his hon. Friend the Member for Carlton (Mr. Holland), who advised me, with his usual courtesy, that it would not be possible for him to be present today.
I am very happy to accept both Amendments. We had a good deal of discussion in Committee on this subject, and I gave an undertaking to consider it again between then and now. I have ascertained that current penal policy tends to discouragee short terms of imprisonment, and this principle is embodied in the Criminal Justice Act, 1967. The original wording of this Bill was lifted, as it were, from earlier legislation, and I certainly accept that, the circumstances having changed, the Amendments should be made.
The Home Office has advised me that it would not include imprisonment on summary convictions in any current legislation unless there were compelling circumstances which made it necessary. I do not think that there are compelling circumstances in this case. The Home Office has advised me that a fine is adequate in the circumstances, and I believe that the fine proposed in the penalty Clause is quite adequate.

Amendment agreed to.

Further amendment made: No. 11, in page 3, line 29, leave out "or to both such imprisonment and such fine".—[Mr. Waddington.]

2.57 p.m.

Mr. David Watkins: I beg to move, That the Bill be now read the Third time.
This is virtually an all-party measure. It is interesting to note that although during the Report stage there have been quite strong expressions of opposing opinion at times, there have been no Divisions. That happy atmosphere existed in the Committee, and I hope that it will persist now.
This happy degree of agreement has been possible only because of the cooperation of Members on both sides, who have shown great interest in the Measure and have done a great deal to help. I express my thanks to all hon. Members for the courtesy with which they have treated me throughout the proceedings, and for the help which has been forthcoming. In this connection I must refer particularly to my hon. Friend the Under-Secretary of State and the officers of his Department, who have been of great assistance to me throughout.
Nor must I let the occasion pass without referring to the very valuable help I have received from outside the House. I refer particularly to the Industrial Law Society, some of whose members—notably, Mr. Geoffrey de N. Clark, its Secretary, and Mr. John Williams, one of its prominent members—have been pillars of strength to me. I place on record my thanks for their help.
The Bill deals with a comparatively small area of employers' liability and employers' liability insurance, but it has very wide ramifications. First and foremost, it seeks to remedy a situation whereby people can be injured in the course of their employment, can be awarded compensation by the courts against their employer, and yet not receive that compensation because the employer does not have the necessary resources. This state of things tends to occur mainly amongst smaller firms. Firms can be bankrupted, and regularly are bankrupted in those circumstances because they lack the resources to meet claims, and have not insured against them.
Quite apart from the injustice to someone who may be seriously injured at work and who does not receive his rights, it seems equally unjust that a small employer, who may have spent a lifetime building up a business, can be bankrup

ted because he is not aware of his liability. The Bill represents an important step towards remedying this situation. The Trades Union Congress has been asking for legislation embodying this principle for a number of years, and hon. Members have pressed the Government in the past, by tabling Questions and in other ways, to introduce such legislation, but it has not been done.
I was initially a little surprised to find that I was the first hon. Member to introduce a Bill embodying this central principle. It can be claimed that remarkable progress has been made. I cannot resist the temptation to point out that I was No. 26 out of 27 in the Ballot for Private Members' Bills, and that in the first instance the Government indicated that they were not prepared to assist with the Bill. Without in any way wishing to pat myself on the back, I think that I can say that we have made remarkable progress in having brought the Bill to this stage in the same Session as it was introduced.
I am hoping that the Bill might lead to the setting up of an employers' liability insurers bureau by the insurance market on the lines of the Motor Insurers Bureau which deals with disputed cases. I accept that there are technical difficulties in doing this, but I hope that the passage of the Bill, assuming it receives the Royal Assent, will lead to this step being taken, A particular case which has been very much in the minds of all of us who have been associated with the Bill during these proceedings was the tragic fire at Glasgow in the autumn of last year.

Mr. R. W. Brown: I have been trying to impress upon my hon. Friend, and the sponsors of the Bill, that that employer was covered and that it was reneging by the insurance company on its bounden duty that led to this. He referred earlier to the word of the insurance companies being their bond. Lord Polwarth ought to be ashamed of himself, in that his word is not his bond. It is in these difficult circumstances that I feel that if we are not careful, while the Bill covers a major aspect, we shall still not catch the "Lord Polwarths" of this world whose word is not their bond.

Mr. Speaker: Order. The hon. Gentleman cannot make a speech on Third Reading in an intervention.

Mr. Watkins: I know the point my hon. Friend is making, and it is precisely to cover that point that this Bill is an important step forward. The setting up of an employers' liability insurers bureau would be a means of preventing such a tragic occurrence. We have produced a good and important piece of legislation, and I ask the House to give it the Third Reading.

3.4 p.m.

Mr. David Mitchell: I congratulate the hon. Member for Consett (Mr. David Watkins) on being fortunate enough to introduce the Bill at all, but also on the tenacity with which he has pushed it forward and brought it to Third Reading. His tenacity was rewarded in Committee when there was a switch of Government Departments and there was an acceptance, if not of responsibility, then of a duty to advise the hon. Gentleman and the Committee about the Bill. I draw attention to the generous phrases which the hon. Gentleman used about the way in which the Bill was treated by both sides in Committee.
There is a real need for legislation to deal with the situation which arises when an employer has failed to insure and an employee is injured and sues the employer who does not have sufficient funds to pay compensation. The loss to an injured man who is unable to claim is as great as that of the employer, whatever the size of his concern. Therefore, this is a worth-while piece of private Member's legislation.
I should like to thank the Minister for the advice which he tendered to the Committee. For nine weeks the Bill languished in the care of another Department without its finding time or the need to give advice about changes required in the terminology of the Bill. Only 48 hours after it was dropped in his lap the Minister was able to start advising the Committee. After an adjournment of only a week we were given the benefit of substantial advice in Committee. It is right that I should express appreciation to the Minister and, through him, to those who advised him.
However, we are still slightly uneasy about who will be covered by the Bill—whether the neighbour's gardener whom one borrows to dig a trench will be covered or whether the farmer who

obtains casual holiday labour needs to be covered. I hope that by the time that regulations are drafted these matters will be absolutely clear beyond any doubt.
I have much pleasure in supporting the Third Reading of the Bill.

3.8 p.m.

Mr. R. W. Brown: I have taken note of your comment, Mr. Speaker, and I can only apologise to you for the urgency with which I regard the Bill.
I add my congratulations to my hon. Friend the Member for Consett (Mr. David Watkins). For him it has been a great trial of strength in trying to encourage us to follow his thinking. The House and the country are indebted to him and to my hon. Friend the Parliamentary Secretary. I have had experience of trying to persuade the Parliamentary Secretary to schedule nasal cancer. I know of his humanity and understanding of the problems in industry. This is another example of his attempts to ensure that people in industry are properly protected.
I, too, have some reservations about whether the Bill will cover all that I would have wished it to cover. My bête noire is the insurance company. I refer particularly to my trade union, the National Union of Furniture Trade Operatives, and the anxiety which relatives, including 15 children, are suffering because the third largest insurance company in the country has chosen to renege upon its bounden duty and its word being its bond. The head of that company is a member of another place, and one would have thought that his standards would have been high enough to be in accord with the expression of this House in the Bill.
The relatives of those killed were entitled to about £200,000, and yet the insurance company is offering them only about £20,000 or £25,000. One can visualise the magnitude of the distressing situation they are in, and I like to feel that somehow the Bill will at least go to the extent of ensuring that employers are insured, and if it does no more than at least inform this noble Lord of his first duty and force him to understand that he should instruct his insurance company to stand by its word as its bond, some purpose will have been served.
From now on, we shall be happy in our minds that employers will be properly insured. Second—and this is something I have pressed for for some time—these insurance covers will be exhibited so that the workers are satisfied that they are properly covered. Third, we shall ensure that our workers feel that should they encounter accident or something greater, their relatives will be properly provided for in accordance with the high principles we have established in this country. I congratulate my hon. Friend and I wish the Bill well and hope that it will reach the Statute Book speedily.

3.12 p.m.

Mr. Pentland: I have great pleasure in congratulating my hon. Friend the Member for Consett (Mr. David Watkins) on the successful conclusion of the Bill. Consett is next to my constituency of Chester-le-Street and, as you know, Mr. Speaker, as a proud product of the North-East yourself, Chester-le-Street is the Mecca of civilisation and now Consett is gradually trying to catch up.

Mr. Speaker: Order. The hon. Gentleman must not bring new contentious matters into the Third Reading of the Bill.

Mr. Pentland: I depart with great haste from that topic, Sir.
I am grateful for all the things which have been said about me and my officials. I am particularly glad that such fine tributes have been paid to the officials of my Department, because I can assure the House that those tributes were certainly well deserved.
As a result of the changes made in the Bill, we have achieved the aim which I hope we all shared when the Bill went into Committee. I believe that we have turned, as we all intended, a good idea into a practical Measure. I must not pretend, on behalf of the Government, that the Bill could be brought into force in the immediate future, assuming that it receives the Royal Assent this Session, because, as I have pointed out at every stage, a great deal of further consultation must take place before the detailed requirements of regulations can be settled. That answers the point made by the hon. Member for Basingstoke (Mr. David Mitchell).
However, we have now a practical framework which will enable regulations

to be made to deal with matters which may emerge from the consultations. Those consultations will proceed and they can be more meaningful now that there is this practical frame of reference.
I must congratulate my hon. Friend once again on the wide support which this, his maiden, Bill has commanded. His maiden is perhaps rather more sophisticated than when he sponsored her, but some forewarning of the ways of the world is no bad thing for a maiden in her position. I wish my hon. Friend every success with the further stages of the Bill.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Orders of the Day — LORRAINE HARDING (DEATH)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Ernest G. Perry.]

3.16 p.m.

Mr. Keith Speed: This afternoon I raise a matter which is causing great concern in part of my constituency and which has been a very real tragedy to a young family who are my constituents living in Tamworth. I know the matter is one which interests the Under-Secretary of State, because he and I both have the honour to represent the Borough of Tamworth.
It concerns the death of a baby girl, a death which, in the words of the coroner at the inquest, was caused by a natural disease which might have responded to treatment had the child been seen by a doctor at the time the mother wanted it seen.
I shall set out the main facts of the case which, with one exception, are not in dispute. It appears to me and to many of my constituents that some aspects of the local medical organisation faced with a very special emergency were inadequate, and that, in the words of the coroner there were
loopholes in the administrative system".
It is not my intention to embark on a witch hunt or personal campaign against any individual or institution. That would, I believe, be unfair and unhelpful. I know that the medical profession in Tam-worth is itself deeply disturbed about this


case. It is in that spirit that I shall put a number of questions to the Under-Secretary of State on matters which, I think, need remedial action to see, as far as humanly possible, that this sort of tragedy cannot be repeated. Health centres are being put up all over the country, and it is more than possible that this sort of case could occur elsewhere. I hope, therefore, that there can be the widest possible publicity through the professional journals so that all the various medical authorities can examine their own organisations wherever they may be.
Lorraine's mother, Mrs. Harding, first noticed something wrong on the evening of Friday, 13th June. She saw that the child had been sick in her cot. I should, perhaps, explain that Lorraine was nine months' old. The next day the child was sick. It had diarrhoea. Mrs. Harding went to the local chemist who gave her some medicine for the child and, quite properly, advised her to see her doctor if the child did not get better over the weekend.
There was no improvement, and on Sunday, 15th June, she called in the doctor, not her own doctor, but the one at the health centre on emergency call that day. He visited the child and told Mrs. Harding to give it water and milk, and he left a prescription. He did not record the visit in the health centre records as he thought it was a routine case. That evening the diarrhoea and sickness had more or less cleared up, but the next morning, Monday, 16th June, the child appeared to be far from well, it was moaning, and seemed to be very weak.
At 11 o'clock that morning Mrs. Harding tried to telephone the health centre, but, during the hour and a half she attempted to do so, every time she tried the line was engaged. She has no telephone in her own home, and she was ringing from a nearby kiosk. She returned home, where friends were looking after Lorraine, and the child seemed a little better, but during the afternoon the child's condition began to deteriorate again and Mrs. Harding tried again to get through to the health centre, starting at ten minutes to four. She eventually got through at 20 minutes past.
Mrs. Harding spoke to a receptionist and was put through to someone else,

not a doctor, and explained the circumstances, and how weak the baby was, and asked to see a doctor, and said she was quite prepared to take the child to the health centre if a doctor would see her there. She was told that the doctor had said that it would take two days for the baby to pick up, and another prescription would be available for collection at 6 o'clock that evening. During this time the baby was at home being looked after by friends.
When she got home from the telephone kiosk, Mrs. Harding was worried about the appearance of her daughter. She put her in a carrycot and went in a friend's car to Tamworth General Hospital. She there asked for medical attention for the child. First, she saw a receptionist, and later on a sister at the hospital.
Here we come to a discrepancy in the evidence as revealed at the inquest. Mrs. Harding claims that the sister told her to go to the health centre for a prescription and made no reference to her seeing a doctor at the centre. The sister claims that she telephoned a doctor at the health centre and was told to send Mrs. Harding and the baby to the centre where the doctor would see the child.
Whichever story is correct, Mrs. Harding by now was thoroughly confused and, in her own words to me, feeling rather guilty at the fuss she was making. She arrived at the centre in the friend's car and was given a prescription by the receptionist. Nothing was said to her about a doctor seeing her baby, and in evidence at the inquest the receptionist at the health centre said that she was given the prescription by a doctor and told that Mrs. Harding would be collecting it, but nothing was said about the doctor wanting to see the baby.
Mrs. Harding collected the prescription from the health centre and she did not see a doctor. She was wondering whether she was making a great fuss about nothing. She went home with the baby, gave the baby her medicine, and at 11 o'clock that night the baby seemed to be better than she had been earlier in the day.
The next morning Mrs. Harding's eldest daughter, aged 3¾, went into her little sisters' room and found her dead in the cot. The cause of death was enterocolitis, and the pathologist at the inquest


said that with proper treatment there was a chance that the child would have recovered.
The questions that arise from this matter are as follows. First, in view of the delays and difficulties in getting through to the centre, are the telephone facilities and the lines to the centre adequate, because on the evidence of this case, certainly in the middle of June, they would not appear to be so?
Second, is it clear to everyone what are the capabilities and responsibilities of a general practice hospital like the Tam-worth General Hospital? To a lay person a hospital is a hospital, but if a hospital cannot raise a doctor quickly because it is a general practice hospital, this should be widely known so that misunderstandings of this sort cannot occur.
The third and vital point is the organisation in health centres, particularly in the doctor-patient relationship. What are the qualifications of people who answer the telephone when patients ring up? On what criteria do receptionists or people at the end of telephones at health centres decide whether a patient is or is not to be put promptly in touch with a doctor?
Although I realise that I am on contentious ground here, I would go so far as to suggest that a mother of a child aged two years or under who is seriously concerned and who telephones the health centre or anywhere else should be able to speak to the doctor directly as of right. We all know that the first two years of a child's life are the dangerous age, and that a child can recover from or decline in a remarkably quick time when suffering from what might be quite minor ailments in older people. The Minister will know that I have a personal interest in this matter. It is essential that the doctor should get information at first hand from the mother. There is a danger of building up a barrier so that parents may call upon doctors when it is too late rather than too early.
There is a national problem. Doctors, who are very busy people, must be protected from frivolous calls, but very young children are in an exceptional category. They cannot speak for themselves, and a mother of a child up to the age of two should have a right to speak

directly to a doctor when she is concerned about her child. If sometimes the case may be trivial, I am prepared to accept, and I hope that the medical profession is, that in other cases there will be serious cause for alarm and that it is right and proper that the mother should speak directly to a doctor.
Does the Minister agree that all emergency calls by doctors from health centres during the weekend or occasions of that sort should be recorded on return to the health centre whether or not the case is routine, particularly in respect of young children where a case is rarely routine because the child's condition rises or falls so quickly? It was clear that in this particular case proper information was not passed on from the doctor who was on emergency call and called on Sunday to Mrs. Harding's own doctor who subsequently dealt with the case.
As far as this particular case is concerned, if the hospital sister's story is true, then the communications between doctor and receptionist in the health centre when Mrs. Harding was sent there by the hospital seem to be not very satisfactory. If the doctor wished to see the baby, as he claimed he did, then instructions to that effect should have been given to his receptionist, but no mention was made of it, only instructions regarding the prescription. One cannot expect a distraught and worried mother, who is beginning to wonder if she is making a fuss over nothing, to barge straight into the doctor's surgery, bypassing the receptionist. Is the Minister satisfied that the workload of the health centre in Tamworth is not too great, bearing in mind the rapid growth of the area both in his constituency and in mine?
I feel that this case raises national as well as local issues. Mrs. Harding, who is an intelligent and conscientious mother cannot be criticised in any way. All the action she took I should imagine my wife would have taken, or, indeed, the wife of any hon. Member present in the same situation. Certainly, Mrs. Harding cannot reproach herself in any way for what she did in this tragic affair. Yet I feel that due to the complexities and growing workload of modern medicine, new barriers are growing between general practitioners and their patients. It is a factor I view with great concern. I would


give maximum weight to this factor in any reorganisation of general practice.
If this very real tragedy to the Harding family makes everyone, not just in Tam-worth but throughout the country, take a long, hard look at their practices and procedures, then little Lorraine Harding's untimely death may save other lives.

3.27 p.m.

The Under-Secretary of State for the Department of Health and Social Security (Mr. Julian Snow): I am grateful to the hon. Member for Meriden (Mr. Speed) for raising this question, which arises from the death in Tamworth of the nine months' old child Lorraine Harding. He has mentioned the fact that I also am one of the hon. Members for Tamworth. I was very sorry indeed to read of this very sad event. Scrutiny of services which appear to have malfunction can sometimes be distressing, but the death of a young child is especially sad. I should like to take the opportunity which this debate gives me to express my very deepest sympathy with Mr. and Mrs. Harding.
Since the health centre concerned was built following activity by myself over a number of years I am particularly anxious to ensure that the local services learn whatever lessons there can be learned from the circumstances leading to Lorraine's death. The administration of this health centre was for a long time a matter of dispute between the Staffordshire County Council, as local health authority, and the doctors who were in the original scheme, and I am, therefore, the more anxious to try to help as far as I can.
For reasons I will explain later nothing I have to say this afternoon is intended to involve a criticism of any person or persons' professionally or otherwise concerned in this unhappy affair.
Before dealing with the points raised by the hon. Gentleman I should mention a factor which to a considerable extent must inhibit me in what I say. There is a statutory procedure for investigating complaints against the practitioners who enter into contracts with executive councils to provide the services for which councils are responsible.
This procedure, the Service Committee procedure, is set out in the National Health Service (Service Committees and

Tribunal) Regulations, 1956. It is peculiar to the Health Service, but it can result in a practitioner being found to be in breach of his terms of service which form part of his contract with an executive council.
Under the service committee procedure it is open to the parents of Lorraine Harding to make a complaint to the Staffordshire Executive Council that the doctors on the council's medical list who appear to be concerned did not comply with the terms of service. I understand that to date no such complaint has been made, but if the parents decide that the complaint appears to be justified, they should write to the Clerk of the Staffordshire Executive Council within six weeks of the event giving rise to the complaint, stating the substance of the matter which they wish to have investigated.
It would be open to the hon. Gentleman to assist Lorraine's parents in making any complaint that they decide to make. The executive council can refer any matter relating to general medical services to a medical service committee for investigation under the regulations I have mentioned. I understand that the appropriate committee of the council will be considering at its meeting next Tuesday whether it should refer this case to its medical service committee for investigation.
The service committee would report on its investigation to the executive council, which would then take a decision on the report. A complainant or respondent has a right of appeal to my right hon. Friend the Secretary of State for Social Services against a decision of an executive council which is adverse to him. In view of the possibility of a medical service committee investigation into this sad case and the further possibility of an appeal to my right hon. Friend, the hon. Member will understand that it would be wrong for me to comment on the actions of the general practitioners involved in this case.
I should perhaps also mention that my right hon. Friend the Secretary of State has no powers under the regulations to require an executive council to refer a matter to a service committee for investigation. The decision to make such a reference is entirely a matter for the Staffordshire Executive Council, at Stafford.
The events leading up to the very sad death of this child were related, so far as I am aware with accuracy, by the hon. Member, although I cannot entirely endorse everything he said. I do not wish to relate the circumstances again—the particular aspects of the case are as the hon. Gentleman has mentioned. For the reasons I have given I would not want to venture opinions on the reasonableness of the actions taken by the doctors or their staff. However, I can deal with some of the points raised by the hon. Gentleman by explaining the arrangements for the administration of the Tam-worth Health Centre.
The centre opened for the provision of local authority services early in December of last year. General medical services by family doctors were first provided there in February and a second partnership joined the centre early in March. The first hospital consultant started sessions at the end of January and other consultant services began in April. The family doctors delayed their entry into the centre because they felt that under the arrangements originally proposed by the Staffordshire County Council, which was the local health authority concerned, they would not have sufficient control over the running of the centre.
However, these difficulties were resolved and it has been agreed that the centre should be controlled by a professional committee consisting of three family doctors, three officers of the county council and a doctor nominated by the regional hospital board. Subject to the formal confirmation of the county council this professional committee is responsible for the appointment of staff within the agreed establishment, and for the organisation of the day-to-day running of the centre, including allocation of duties to staff and the preparation of rotas.
Although the staff is on its payroll the county council has sought to leave day-to-day administration of the centre to the doctors working there, but at the same time to meet as quickly as possible all reasonable requests made of it by the professional committee. An example of this is the installation of additional telephone lines. On 23rd May, the council was

informed that the professional committee had asked for the installation of three additional outside telephone lines to the centre. These were in operation by 28th May. I understand that the county council has received no further request from the professional committee for additional lines.
Whether or not the number of doctors and ancillary staff at the health centre is adequate is a difficult question to answer. There are eight family doctors practising at the centre in two partnerships of four, and this is the number of doctors for whom the centre was planned. There is no fixed complement of general practitioners in any area against which a shortage could be measured.
The Tamworth area is "designated" as under-doctored and initial practice allowances are, therefore, available to encourage doctors to begin practising there. Allowances of a different kind are available to doctors already practising in areas such as this which have been continuously "designated" for over three years.
However, family doctors in the Health Service are independent contractors and my right hon. Friend has no power to direct them to practise in particular areas.
As regards ancillary staff at the centre—that is to say, receptionists and people like that—it is really a matter for the professional committee to decide how many staff it needs and then, as I have said, to seek the approval of the county council to the employment of any additional staff that are needed.
On 1st April this year, when the ancillary staff at the centre became employees of the county council, there were the equivalent to seven and a half whole time clerical and receptionist staff. The professional committee considered that the number of clerks and receptionists should be increased from this figure to the equivalent of nine whole time staff, primarily to meet the needs of the family doctors.
The county council agreed to this, and I understand that an advertisement has been placed for an additional whole time clerical assistant and that some of the existing part-time staff will be working longer hours. If the professional committee consider that more staff are needed,


its proposals will no doubt be considered by the county council.
As I have already said, the organisation of the duties of ancillary staff at the centre is largely a matter for the professional committee. It is up to the doctors working at the centre to decide the functions of their ancillary staff. Family doctors are responsible for the organisation of their practices and, thus, for the acts and omissions of their ancillary staff. Doctors have to draw the line somewhere between being too accessible and being inaccessible to their patients, but, in drawing this line, they must have regard to their obligations under the terms of service.
For example, a doctor is required to provide a patient with all proper and necessary treatment; to visit and treat him if his condition so requires; and to refer him, if necessary and with his consent, to the hospital and specialist services. If a doctor organises his affairs in such a way as to raise the question whether his obligations may not have been properly discharged, he may make himself liable to being found in breach of his terms of service under the service committee procedure.
Subject to certain conditions a doctor can make arrangements for another doctor to deputise for him, but he is liable for that doctor's acts and omissions under the terms of service, unless the deputising doctor is on the medical list of the same executive council—as was the deputy doctor hi this case.
The hon. Gentleman will see, therefore, that the terms of service lay certain obligations on family doctors in principle, and it is up to them to organise their own practices to ensure that their obligations under the terms of service are fulfilled. Matters such as communications between one doctor and another in a partnership and doctors and receptionists are very much matters of individual practice organisation. I should not like to comment on the practice organisation at the centre in view of the possibility of a service committee case.
The hon. Gentleman raised the question of the rôle of Tamworth Hospital in this case. I should perhaps explain that Tamworth Hospital is a 68-bed general practitioner unit. Medical cover, including that for casualty services, is provided

by local general practitioners in contract with the hospital management committee. The arrangements are in accord with the Department's advice to hospital authorities that accident and emergency services should be concentrated in major centres—in this case probably Good Hope District General Hospital—and that serious cases should be taken to such hospitals; and that hospital boards could consult executive councils, which are responsible for the general practitioner services, and local medical committees on ways of arranging for patients in less serious need to be treated by general practitioners.
In cases of emergency at Tamworth Hospital contact would be made with either the general practitioner casualty officer on call for attendance at Tam-worth Hospital or with the patient's own general practitioner, if this doctor had a contract with the Management Committee and had beds at the hospital. It would be the responsibility of the general practitioner approached to arrange for a patient's admission to Tamworth or another hospital if this were required.
The on-call casualty duties at Tam-worth Hospital are shared between 12 doctors. There does not appear to have been a breakdown of arrangements in the case of Lorraine Harding, as a doctor appears to have been consulted as soon as the child arrived at Tamworth Hospital.
I share the hon. Gentleman's concern over the death of this young child. The authorities and individuals concerned are naturally distressed as well, and are considering what steps should be taken as a result. In view of the possibility of an investigation under the service committee procedure, I would not like to comment further, but I am grateful to the hon. Gentleman for raising the matter.
The hon. Gentleman also mentioned the question of recording messages of an emergency nature which might be taken by a doctor on call, say, at the weekend. I note this point, and no doubt my words will be read by the appropriate authorities.
I am grateful to the hon. Gentleman for raising the case. He said, I think quite rightly, that it may conceivably be something that requires attention in the matter of practices—I do not mean medical practices, but the efficiency of


operational practices at other health centres.
The hon. Gentleman's speech and what I have said will no doubt be examined by other authorities—local health authorities and other practitioners. The House

is indebted to the hon. Gentleman for raising the case as he has, in a very moderate way in the circumstances.

Question put and agreed to.

Adjourned accordingly at eighteen minutes to Four o'clock.